Dynamic Market Correlation Analyzer (DMCA) v1.0

4 Nov

Description
The Dynamic Market Correlation Analyzer (DMCA) is an advanced TradingView indicator designed to provide real-time correlation analysis between multiple assets. It offers a comprehensive view of market relationships through correlation coefficients, technical indicators, and visual representations.

Key Features
- Multi-asset correlation tracking (up to 5 symbols)
- Dynamic correlation strength categorization
- Integrated technical indicators (RSI, MACD, DX)
- Customizable visualization options
- Real-time price change monitoring
- Flexible timeframe selection

## Use Cases
1. **Portfolio Diversification**
- Identify highly correlated assets to avoid concentration risk
- Find negatively correlated assets for hedging strategies
- Monitor correlation changes during market events

2. Pairs Trading
- Detect correlation breakdowns for potential trading opportunities
- Track correlation strength for pair selection
- Monitor technical indicators for trade timing

3. Risk Management
- Assess portfolio correlation risk in real-time
- Monitor correlation shifts during market stress
- Identify potential portfolio vulnerabilities

4. **Market Analysis**
- Study sector relationships and rotations
- Analyze cross-asset correlations (e.g., stocks vs. commodities)
- Track market regime changes through correlation patterns

Components

Input Parameters
- **Timeframe**: Custom timeframe selection for analysis
- **Length**: Correlation calculation period (default: 20)
- **Source**: Price data source selection
- **Symbol Selection**: Up to 5 customizable symbols
- **Display Options**: Table position, text color, and size settings

Technical Indicators
1. **Correlation Coefficient**
- Range: -1 to +1
- Strength categories: Strong/Moderate/Weak (Positive/Negative)

2. **RSI (Relative Strength Index)**
- 14-period default setting
- Momentum comparison across assets

3. **MACD (Moving Average Convergence Divergence)**
- Standard settings (12, 26, 9)
- Trend direction indicator

4. **DX (Directional Index)**
- Trend strength measurement
- Based on DMI calculations

Visual Components
1. **Correlation Table**
- Symbol identifiers
- Correlation coefficients
- Correlation strength descriptions
- Price change percentages
- Technical indicator values

2. **Correlation Plot**
- Real-time correlation visualization
- Multiple correlation lines
- Reference levels at -1, 0, and +1
- Color-coded for easy identification

Installation and Setup
1. Load the indicator on TradingView
2. Configure desired symbols (up to 5)
3. Adjust timeframe and calculation length
4. Customize display settings
5. Enable/disable desired components (table, plot, RSI)

Best Practices
1. **Symbol Selection**
- Choose related but distinct assets
- Include a mix of asset classes
- Consider market cap and liquidity

2. **Timeframe Selection**
- Match timeframe to trading strategy
- Consider longer timeframes for strategic analysis
- Use shorter timeframes for tactical decisions

3. **Interpretation**
- Monitor correlation changes over time
- Consider multiple timeframes
- Combine with other technical analysis tools
- Account for market conditions and volatility

Performance Notes
- Calculations update in real-time
- Resource usage scales with number of active symbols
- Historical data availability may affect initial calculations

Version History
- v1.0: Initial release with core functionality
- Multi-symbol correlation analysis
- Technical indicator integration
- Customizable display options

Future Enhancements (Planned)
- Additional technical indicators
- Advanced correlation algorithms
- Enhanced visualization options
- Custom alert conditions
- Statistical significance testing