Using Hinton diagrams to visualize stock market correlations


Forecasts are rather difficult, especially when they’re about the future. Or so the saying goes. While predictiong returns is a pointless exercise, there is some value in keeping an eye on correlations.

Some time ago, I discovered Matplotlib’s Hinton example. That worked well, but the labels were hard to fix. Today I discovered the excellent mpltools packages. It comes with a more efficient Hinton implementation and labels were also easy to add. Crispy. Fast. Perfect label placement.

Still worth mentioning that correlations fluctuate widely over time and I wouldn’t base a portfolio on them. (These are just 2 random ETFs)