Currency Correlation Calculator
Calculate correlation between major currency pairs in forex trading. Understand positive, negative, and neutral relationships between currencies like EUR/USD, GBP/USD, USD/JPY, and more.
Step 1: Select Currency Pairs
Understanding Currency Correlation
Currency correlation measures how two currency pairs move in relation to each other. Positive correlation (near +1) means they move together, negative correlation (near -1) means they move oppositely, and zero correlation means no relationship.
Step 2: Calculation Options
Correlation Interpretation
+0.8 to +1.0: Strong Positive Correlation
+0.5 to +0.8: Moderate Positive Correlation
0 to +0.5: Weak Positive Correlation
-0.5 to 0: Weak Negative Correlation
-0.8 to -0.5: Moderate Negative Correlation
-1.0 to -0.8: Strong Negative Correlation
Currency Correlation Results
Correlation Coefficient
Major Currency Pair Correlations
| Currency Pair | EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | USD/CAD |
|---|
Trading Implications
Positive Correlation (0.85)
Trading Strategy: When pairs are strongly positively correlated, they tend to move in the same direction. This can be used for confirmation of trends but provides less diversification in a portfolio.
Risk Management: Be cautious of overexposure – holding multiple positively correlated pairs increases risk during market reversals.
Hedging Opportunities
For EUR/USD and GBP/USD: These pairs often show strong positive correlation (typically 0.7-0.9). Consider reducing position size when trading both to avoid compounded risk.
Alternative Hedges: USD/CHF often shows negative correlation with EUR/USD and GBP/USD, providing natural hedging opportunities.
Market Conditions
Risk-On Environment: AUD/USD, NZD/USD, and EUR/USD often correlate positively during risk appetite.
Risk-Off Environment: USD/JPY, USD/CHF, and gold often correlate positively during risk aversion.
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