Currency correlation
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Currency correlation is a statistical measure of strength and direction of a linear relationship between two currency pairs.
Currency correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation coefficient of +1) implies that as one currency moves, either up or down, the other currency will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one currency moves in either direction the currency that is perfectly negatively correlated will move by an equal amount in the opposite direction. If the correlation is 0, the movements of the currencies is said to have no correlation - they are completely independent, and there is no relationship between their movements. In the broader sense, currency correlation can refer to the correlation between any currency pairs and the commodities, stocks and bonds markets.
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