robinhood-options-mobile

Correlation Analysis

The Correlation Analysis feature provides a visualization of the correlation matrix for the assets in your portfolio. This tool helps investors understand the diversification of their holdings and identify concentration risks.

Overview

A correlation matrix displays the correlation coefficients between pairs of assets. The coefficient ranges from:

• +1.0: Perfect positive correlation (assets move in the same direction).
• 0.0: No correlation (assets move independently).
• -1.0: Perfect negative correlation (assets move in opposite directions).

Features

• Correlation Matrix Heatmap: Visual grid showing correlation between your top 15 holdings.
• Interactive Details: Tap on any cell to see the precise correlation value, proper descriptive interpretation (e.g., “Strong positive correlation”), and the “Overlapping Days” count to judge data quality.
• Legend & Education: Built-in legend explaining the color scale and an information dialog explaining how to interpret correlation coefficients.
• Color Coding:
  • Red: High positive correlation (Low diversification benefit).
  • Blue: High negative correlation (Hedging benefit).
  • Grey/White: Low correlation (Diversification benefit).
• Automated Calculation: uses 1-year historical daily returns to compute robust correlation statistics.
• Progress Tracking: Real-time loading status showing the number of symbols processed.

How to use

1. Go to the Portfolio Analytics section.
2. Scroll to the Risk Metrics card.
3. Tap on View Correlation Matrix.
4. The matrix will load, fetching historical data for your positions.

Implementation Details

• Backend/Service: Uses RobinhoodService (or other brokerage services) to fetch InstrumentHistoricals.
• Math: Calculates Pearson correlation coefficient on daily returns of aligned trading days.
• Privacy: All calculations are performed on-device or via secure proxy; no portfolio data is stored externally for this analysis.