I was wondering if anyone has done research, building a trading stratergy around correlation analysis? Tradestation has a correlation indicator which plots the value of two markets/stocks as follows, but I am not sure what to do with it. Would anyone have any ideas or point me to books/articles, i am interested in trigger to enter a trade and exit etc. Thanks for your time. Market Synopsis The Correlation indicator calculates the frequency of price movement in the same direction and in opposite directions for 2 markets during the number of bars specified by the input Length. This frequency is indexed and plotted as a value between 1 and -1. This is used as a measure of the tendency of two markets to move in the same direction. A positive Correlation value indicates that the 2 markets tend to move in the same direction. A negative Correlation value indicates a strong tendency for the 2 markets to move in opposite directions. A Correlation value of near 0 indicates there is very little correlation between the two markets.