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Summary: Currency
Correlations

Like synchronized Partner Center

swimmers, some Find a Broker
currency pairs
move in tandem
with each other.

And like magnets

of the same poles
that touch, other
currency pairs
move in opposite
directions.
When you are simultaneously
trading multiple currency pairs in
your trading account, the most
important thing is to make sure
you’re aware of your RISK
EXPOSURE

You might believe that you’re

spreading or diversifying your risk by
trading in different pairs, but you
should know that many of them tend
to move in the same direction.

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By trading pairs that are highly

correlated, you are just magnifying
your risk!

Correlations between pairs can be

strong or weak and last for weeks,
months, or even years. But always
know that they can change on a
dime.

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Staying up-to-date with currency

correlations can help you make
better decisions if you want to
leverage, hedge, or diversify your
trades.

A few things to
remember…
Coefficients are calculated using
daily closing prices.

Positive coefficients indicate that

the two currency pairs are positively
correlated, meaning they generally
move in the same direction.

Negative coefficients indicate that

the two currency pairs are
negatively correlated, meaning they
generally move in opposite
directions.
 Correlation coefficient values near
or at +1 or -1 mean the two currency
pairs are highly related.

Undergraduate - Senior Currency…

Correlations can be used to hedge,

diversify, leverage up positions, and
keep you out of positions that might
cancel each other out.

Currency Pairs that

Typically Move in the
SAME Direction

EUR/USD and GBP/USD

EUR/USD and AUD/USD

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EUR/USD and NZD/USD

USD/CHF and USD/JPY

AUD/USD and NZD/USD

Currency Pairs That
Typically Move in the
OPPOSITE Direction

EUR/USD and USD/CHF

GBP/USD and USD/JPY

USD/CAD and AUD/USD

USD/JPY and AUD/USD

GBP/USD and USD/CHF

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When you find yourself wanting to

trade two pairs that are highly
correlated, it’s okay if you take both
setups.
Just make sure you have rules in
place when you traded correlated
pairs and always stick to your risk
management rules!

Currency Correlations
Browse All Quizzes

Bonnie and Clyde, peanut butter and

jelly, Justin Bieber and his hair. Some
things just go well together, just like
currency correlations. How well do you
know these?
 Start Quiz

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