> For the complete documentation index, see [llms.txt](https://docs.candelacharts.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.candelacharts.com/investing/risk-and-portfolio-management/composite-risk-index/confluences.md). # Confluences Composite Risk Index Confluences The Composite Risk Index is a macro tool. It is highly effective when paired with localized, lower-timeframe tactical indicators from the CandelaCharts library: ### 1. Business Cycles The Composite Risk Index acts as an incredibly powerful timing tool when overlaid with the CandelaCharts **Business Cycles** indicator. * While the Business Cycle indicator identifies the broader structural phase of the economy (e.g., Expansion vs. Contraction), the Composite Risk Index dictates *how* capital should be allocated within that phase. * For example, if the Business Cycle reads "Expansion" and the Risk Index flashes **Risk-On (Teal)**, this provides ultimate structural confluence to maximize portfolio leverage and beta. ### 2. Macro Liquidity Gap In a **Risk-Off** or **Crisis** regime, the market often experiences severe liquidity imbalances. Pair the Risk Index with the CandelaCharts **Macro Liquidity Gap** indicator. * When the Risk Index flashes a Crisis score (-1.0 to -2.0) precisely when the Macro Liquidity Gap indicator enters a deep **Buy Zone** (indicating that global M2 money supply is significantly outpacing the underlying market index), it offers the ultimate, high-conviction "Buy the Dip" confluence. ### 3. Macro Credit Model Use the CandelaCharts **Macro Credit Model** to confirm systemic credit stress and shrinking liquidity. * If the Risk Index transitions to **Risk-Off** or **Crisis**, you should simultaneously see the Macro Credit Model's Z-Score spike into **Elevated** (+1.0) or **Stress** (+2.0) levels. This confirms that High Yield corporate spreads are widening against Investment Grade bonds—meaning institutional capital is demanding higher yields for risk, directly validating the regime shift. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.candelacharts.com/investing/risk-and-portfolio-management/composite-risk-index/confluences.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.