Intermarket Correlation Trading

Futures Advanced NIFTY Futures BANKNIFTY Futures FINNIFTY Futures Stock Futures

Exploits relationships between correlated markets and instruments

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Quick Reference

Strategy Type Intermarket Analysis / Correlation Trading
Market Outlook Exploits relationships between correlated markets and instruments
Risk Profile Moderate - diversified exposure reduces single-instrument risk
Reward Profile Consistent returns from correlation convergence and divergence trades
Time Horizon Intraday to swing (1-7 days) depending on correlation signal
Capital Requirement Higher (₹4,00,000 - ₹8,00,000 for multi-instrument positions)
Margin Type NRML preferred for correlation trades; MIS for intraday spreads
Best Used When Correlation divergence detected, spread trading opportunities, cross-market signals present

When to Use This Strategy

Correlation divergence detected, spread trading opportunities, cross-market signals present

India-Specific Notes

Lot Sizes

NIFTY 25 units per lot (₹50 per point)
BANKNIFTY 15 units per lot (₹15 per point)
FINNIFTY 25 units per lot (₹25 per point)
Stock Futures Varies by stock

Key Correlations

Nifty Banknifty 0.85-0.95 typical correlation
Nifty Finnifty 0.80-0.90 typical correlation
Banknifty Finnifty 0.90-0.95 typical correlation
Nifty Sgx 0.95+ correlation with SGX NIFTY

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