Bank Nifty vs Nifty Correlation

Bank Nifty is Nifty with leverage to financials; their spread widens in risk-on (banks lead) and compresses in stress. Feature bn_nifty_spread = (banknifty_ret - nifty_ret) z-scored. The model uses it to avoid double-exposing both indices on the same signal -- when correlated > 0.9, one position suffices. Divergence (spread extreme) flags sector rotation the chain alone misses. This cross-index feature is rare in retail models and adds genuine signal: it tells you if your Nifty call is also a bank call, or if banks disagree.