How to Read a Forex Correlation Table
1. Identify the Currency Pairs:
- Rows and columns represent different currency pairs (e.g., EUR/USD, GBP/USD).
2. Understand the Correlation Values:
- +1: Perfect positive correlation (pairs move together).
- -1: Perfect negative correlation (pairs move in opposite directions).
- 0: No correlation (random movement).
3. Focus on High Correlations:
- Values close to +1 or -1 are more significant.
- Use them to avoid overexposure or hedge risk.
4. Use Colors for Quick Insights:
- Green: Positive correlation (e.g., 0.85 means pairs move together).
- Red: Negative correlation (e.g., -0.75 means pairs move in opposite directions).
5. Choose Based on Your Strategy:
- Day traders may prefer short-term correlations.
- Swing traders may use longer-term data.
Example: If EUR/USD and GBP/USD have a correlation of 0.90, it means they often move together. Avoid opening positions in both to limit risk.
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Currency | AUDUSD | EURUSD | GBPUSD | NZDUSD | USDCAD | USDCHF | USDJPY |
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