THISMA btccorrelation

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Description:

This is a tool designed for traders who want to analyze correlation between any traded crypto's price in USD and the price of Bitcoin in USD.

Key Features:

Adjustable Correlation Window: The script features an input parameter that allows traders to set the length of the correlation window, with a default value of 14. Lower if you want faster granularity.

Clear Visualization: The correlation coefficient is plotted in a distinct pane below the main trading chart.

Reference Lines for Interpretation: Horizontal reference lines are included at 0.5 (indicating weak positive correlation), -0.5 (indicating weak negative correlation), and 0 (indicating no correlation). These lines, color-coded in green, red, and gray respectively, assist traders in quickly interpreting the correlation coefficient's value.

Applications:

Market Insight: If you want to be able to monitor if you should enter a trade on an altcoin or if its better to stick to Bitcoin to avoid being double exposed.

Risk Management: Identifying the correlation can help in assessing and managing the systemic risk associated with market movements, especially in cryptocurrency markets where Bitcoin's influence is significant.