Currency Pair Correlation
The correlation matrix shows the degree of relationship between currency pairs. +1 means perfect co-movement, -1 means perfect opposition, 0 means no relationship.
How to read the matrix
+0.7 ... +1.0— Strong positive — pairs move together
+0.3 ... +0.7— Moderate positive — partial co-movement
-0.3 ... +0.3— Weak/no relationship — independent movements
-0.7 ... -0.3— Moderate negative — partial opposition
-1.0 ... -0.7— Strong negative — pairs move oppositely
Why use correlation?
🛡 Diversification — don't open simultaneous positions in highly correlated pairs (EUR/USD and GBP/USD), it doubles the risk.
🔄 Hedging — use inverse correlation (EUR/USD and USD/CHF) to reduce risks.
📊 Confirmation — if two correlated pairs give the same signal, it strengthens its reliability.
💡 Tip: Correlation changes over time. Check it on different timeframes before opening positions.