Beta -> The New System

Beta → The New System 📊
Calculate and visualize your asset’s sensitivity to a benchmark over a rolling lookback period.

What is Beta? 🤔
Beta measures how much your asset moves in relation to a chosen benchmark. A Beta of 1 means it moves in perfect sync; above 1 means it’s more volatile (amplified moves), and below 1 means it’s less volatile (dampened moves). By tracking Beta you see if your asset is a risky rocket or a stable ship compared to the market. 🚀⚓️

Indicator Inputs ⚙️
Lookback Period ⏳
Number of bars (e.g. days) over which to compute rolling averages, covariance, and variance.

Benchmark Symbol 🏷️
The ticker of the market or index you want to compare against (e.g. BTCUSD, ETHUSD, an index).

How It Works 🧮
Fetch prices for both your asset and the benchmark at each bar.

Compute returns by calculating the percentage change from bar to bar.

Smooth returns with a simple moving average over the lookback period to get mean asset and benchmark returns.

Calculate covariance between asset and benchmark returns to see how they move together.

Calculate variance of the benchmark returns to measure its own volatility.

Divide covariance by variance (with a check to avoid division by zero)—that ratio is your Beta.

Plot & Interpretation 🎨
Line Color

Always blue for Beta, emphasizing volatility comparison.

Reference Line

A dashed gray line at Beta = 1 marks “market-level” sensitivity.

Reading Beta

β > 1 🟥
Asset tends to exaggerate benchmark moves—higher upside potential but larger downside risk.

β = 1 🟩
Asset moves in lockstep with your benchmark.

β < 1 🟦
Asset smooths out benchmark swings—less risk but also muted returns.

Pro Tips 💡
Combine Alpha + Beta: high Beta with positive Alpha can be great in up-markets but painful in drawdowns.

Monitor Beta shifts: a sudden jump could signal a regime change or new correlation dynamics.

Test different benchmarks: small-cap altcoins may track a broader crypto index differently than they track Bitcoin.

By keeping an eye on Beta in real time, you’ll understand not just how much you’re making, but how much market risk you’re taking on every trade.