The Traderszone Network

Published in TZ Latest News 7 November, 2015 by The TZ Newswire Staff

Using Correlations to Quantify the Effect of Rising Rates

Chartists can use the Correlation Coefficient to understand the relationship between Treasury yields and certain groups, such as banks, utilities and REITs. The chart below shows the 10-year Treasury Yield ($UST10Y) in the main window and seven correlations in the indicator windows. I am using weekly data, a 13-week Correlation Coefficient and a 26-week EMA for further smoothing. This extra smoothing is because I am simply trying to determine the general tendency. This is clearly not a trading vehicle, but rather an observation to be considered along with the price chart for each ETF.

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