How To Read Currency Correlation Tables

Are you a visual learner? Do you find that you grasp information better with visual aids? If so, you're in luck! Let's break down how to read currency correlation tables, which can make a significant difference in your trading strategy.

What is a Correlation Coefficient?

A correlation coefficient is a statistical measure that quantifies the relationship between two variables.

Strength: How closely the two variables move together.Direction: Whether they move in the same direction (positive correlation) or opposite directions (negative correlation).

The correlation coefficient ranges from -1 to 1:

1: Perfect positive correlation. The pairs move in the same direction.-1: Perfect negative correlation. The pairs move in opposite directions.0: No correlation. The pairs move randomly and independently of each other.

How to Interpret the Correlation Coefficient in Currency Pairs

Positive Correlation ( 1): When the correlation value is close to 1, it means the two currency pairs have a strong positive relationship and will likely move in the same direction.Negative Correlation (-1): A value close to -1 indicates a strong negative relationship, meaning the pairs move in opposite directions.No Correlation (0): A value around 0 suggests there is no relationship, and the movements of the pairs are independent of each other.

Reading Currency Correlation Tables

The following tables show the relationship between the EUR/USD pair and several other major currency pairs over different time frames (1 week, 1 month, 3 months, 6 months, 1 year).

Each table provides the correlation coefficient for each currency pair, helping you identify whether pairs move together or in opposite directions.

EUR/USD Correlations

Currency Pair1 Week1 Month3 Months6 Months1 YearEUR/USD1.000.63-0.62-0.62-0.69USD/JPY-0.230.63-0.62-0.62-0.69USD/CHF0.940.130.830.310.88GBP/USD-0.98-0.900.14-0.35-0.93USD/CAD0.980.900.630.610.95AUD/USD0.930.960.420.650.96NZD/USD0.930.910.610.280.66EUR/JPY0.860.860.750.710.02EUR/GBP0.640.860.750.710.02

USD/JPY Correlations

Currency Pair1 Week1 Month3 Months6 Months1 YearUSD/JPY1.000.63-0.62-0.62-0.69EUR/USD-0.230.63-0.62-0.62-0.69USD/CHF0.22-0.520.520.780.74GBP/USD-0.21-0.52-0.620.43-0.69USD/CAD-0.220.46-0.30-0.70-0.69AUD/USD0.070.640.09-0.63-0.69NZD/USD0.140.890.240.580.09EUR/JPY-0.200.77-0.35-0.68-0.20EUR/GBP0.770.46-0.40-0.63-0.69

Key Takeaways

Positive Correlation: Currency pairs move in the same direction.Negative Correlation: Currency pairs move in opposite directions.Zero Correlation: Currency pairs move randomly with no predictable relationship.

By understanding how currency pairs correlate, you can make smarter trading decisions, reduce risk, and improve your overall strategy.

How To Read Currency Correlation Tables

Password Reset

Password Reset

You are already logged in

Risk Management

The Number 1 Cause of Death of Forex Traders

Position Sizing

Setting Stop Losses

Scaling In and Out

Currency Correlations

The Most Common Trading Mistakes New Traders Make

Forex Trading Scams

Personality Quizzes

Graduation Speech