Visualizing Correlation and Linear Regression Between Market Symbols
Summary
The article describes an MQL5 canvas tool for plotting paired symbol prices as scatter points, fitting a linear regression line, and displaying slope, intercept, correlation, and R-squared. It explains correlation as a measure of direction and strength of association, and regression as a fitted relationship that can help examine dependencies or divergences. Price data are loaded for two symbols, regression calculations use ALGLIB, and the plot refreshes when a new bar forms.
The implementation also covers dynamic axis ticks, styling, a statistics panel, and draggable and resizable canvas controls. The evidence offered is a compiled visualization described as a GIF; no numerical trading results, statistical significance analysis, or out-of-sample tests are reported. Correlation and a good regression fit alone do not establish a stable pair-trading relationship or profitable entry and exit rules.
Key ideas
- A scatter plot of two symbols' prices can make their observed relationship easier to inspect.
- Linear regression provides a fitted slope and intercept, while correlation and R-squared summarize association and fit.
- The canvas tool reloads prices and recalculates its statistics when a new bar appears.
- Interactive sizing, dragging, dynamic ticks, and an overlay panel make the plot configurable within the chart.
- The visualization does not establish that a relationship is stable or tradable.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.