Thread: Forex correlation

FOREX CORRELATION

CORRELATION TABLE

The following tables represents the correlation between the various parities of the foreign exchange market.
The correlation coefficient highlights the similarity of the movements between two parities.

• If the correlation is high (above 80) and positive then the currencies move in the same way.
• If the correlation is high (above 80) and negative then the currencies move in the opposite way.
• If the correlation is low (below 60) then the currencies don't move in the same way.

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Some interesting changes in the currency correlation values during the past one week as compared to the past one month.
AUD/USD vs EUR/USD average for past one month had gone to -0.24 from the yearly average of 0.65 but during the past week it started becoming normal again and has come to 0.49. USD/CAD and EUR/CHF are still shaken up from the yearly average. This currency correlation tool certainly is useful for correlation trading.

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but how do you do it? when the prices "tear apart"?

This is a psychological element in forex trading. forex market changes time to time. Most of time, the price may be beyond traders expectation. When traders get profits, they are driven by happiness so they sometimes are not willing to forget the profit they get, which inevitably have bad impact on the forthcoming trading.