Stock Correlation Network

A stock correlation network is a graphical representation of the relationships between the price movements of different stocks. Stocks that move together, either positively or negatively, are connected by edges in the network, with the strength of the connection reflecting the correlation between their price movements. Investors use stock correlation networks to analyze how stocks are related, helping them to diversify portfolios or identify trading opportunities based on correlated movements.

Example

A stock correlation network may show a strong positive correlation between two companies in the same industry, such as tech giants, whose stock prices tend to move together.