Liquidity All Time Correlations Analysis

This indicator measures the rolling correlation (120-day window) between Global Liquidity and various assets including cryptocurrencies, stocks, commodities, and indices. Understanding these correlations helps identify which assets are most sensitive to changes in global liquidity conditions.

Loading All Time Correlations data...

Understanding Liquidity Correlations

What are Liquidity Correlations?

Liquidity correlations measure how closely an asset's price movements track with changes in Global Liquidity. Global Liquidity represents the total amount of liquid assets in the global financial system, primarily driven by central bank policies, monetary expansion, and credit creation.

A correlation of +1 indicates perfect positive correlation (asset moves in lockstep with liquidity), 0 indicates no correlation, and -1 indicates perfect negative correlation (asset moves opposite to liquidity).

How to Use This Indicator

  • Select Assets: Use the "Select Assets" button to choose which correlations to display. You can compare cryptocurrencies, stocks, commodities, and other asset classes.
  • Time Range: Adjust the time range to see how correlations have evolved over different periods. Longer timeframes show structural relationships, while shorter periods highlight recent shifts.
  • Rolling Window: The 120-day (approximately 4-month) rolling window smooths out short-term noise while remaining responsive to meaningful changes in the relationship.
  • Multi-Asset Comparison: Compare correlations across asset classes to identify which assets are most sensitive to liquidity conditions at any given time.

Correlation Interpretation

Strong Positive Correlation (> 0.5):

  • Asset tends to rise when liquidity expands and fall when liquidity contracts
  • Typical for risk assets like cryptocurrencies and growth stocks
  • Green background zone in the chart

Weak/No Correlation (-0.1 to 0.1):

  • Asset moves independently of liquidity conditions
  • May indicate asset is driven by other fundamental factors
  • Gray background zone in the chart

Strong Negative Correlation (< -0.5):

  • Asset tends to rise when liquidity contracts (inverse relationship)
  • Typical for safe-haven assets like the US Dollar (DXY)
  • Red background zone in the chart

Asset Categories

Cryptocurrencies: BTC, ETH, SOL, XRP, DOGE, USDT, Total Crypto Market Cap

Stocks: S&P 500 (SPX), Nasdaq (NDX), MicroStrategy (MSTR), World Index

Commodities: Gold, Oil

Currencies: US Dollar Index (DXY)

Indices: MOVE Index (bond market volatility)

Trading Applications

  • Regime Identification: When correlations shift dramatically, it may signal a change in market regime or liquidity conditions.
  • Asset Selection: During liquidity expansion, favor assets with high positive correlations. During contraction, consider assets with low or negative correlations.
  • Risk Management: Assets with similar liquidity correlations tend to move together. Diversify across different correlation profiles for better risk management.
  • Leading Indicators: Changes in correlations may precede major market moves as the relationship between liquidity and asset prices evolves.

Data Sources

Correlation data is calculated daily using a 120-day rolling window. Global Liquidity data aggregates central bank balance sheets and monetary metrics. Asset price data is sourced from established market data providers. The analysis covers data from 2015 onwards to ensure sufficient historical perspective while maintaining relevance to current market structure.