With all the noise in market news feeds, how are investors supposed to tell what price movements to pay attention to and how those movements are related to one another? MarketReader makes that process easy for traders.
As opposed to nearly all leading investment platforms, MarketReader makes it easy to visualize assets moving in correlation with one another. With just one click, users can not only see what tickers are most correlated to a specific asset, but also why those correlated assets are moving – recent news, releases, social chatter, and more.
Raytheon Technologies (RTX)’s correlated assets from July 25, 2023.
In the image above, users can see their target asset, in this case Raytheon Technologies (RTX), its price, performance, and an explanation of why it is moving in the top left corner. The rest of the cards display information about assets that MarketReader has determined to be moving with the highest correlation to RTX.
ETFs that include RTX obviously have the highest correlation, like Direxion Daily Aerospace & Defense (DFEN) and the iShares U.S. Aerospace & Defense ETF (ITA). Companies in the same sector as RTX can also have high correlation, like General Dynamics (GD), which had a correlation of 0.77 with RTX on July 25.
To better understand the correlated assets’ movements, users may click on any card to open a summary or an intraday chart. Users can also add assets to their watchlist by clicking on the plus button in the bottom right corner of the card.
What can you do with correlated assets?
One way that traders can use the correlated assets screener is to identify stocks that are statistically correlated to the target asset, but have not moved in tandem yet.
For example, if a company reports positive earnings and its price increases, some traders might feel like they missed the move. But peer companies, i.e. those in the same sector, might also beat shareholder expectations in coming days.
With MarketReader, users can easily pinpoint assets that haven’t moved yet but are most likely to according to their historical correlation with the target asset. They can then add those stocks to a watchlist and receive alerts when any of the selected stocks begin moving unusually.
Importantly, MarketReader shows users how correlated assets are moving in volatility adjusted terms. The volatility adjustment can help users understand that even if an asset is moving in sympathy with a target asset, it might not have had the same full reaction as the target asset yet.
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