Tool
Currency Correlation Matrix
Visualise real-time correlations between major currencies. See which pairs move in tandem and which move inversely to manage portfolio risk and avoid doubling up on exposure.
Understanding Currency Correlation
Currency correlation measures how two currency pairs move in relation to each other. A correlation of +1.0 means the pairs move perfectly in sync, while -1.0 means they move in opposite directions. A value near 0 indicates no meaningful relationship.
Correlations are not static — they shift over time based on economic conditions, monetary policy, and market sentiment. What was strongly correlated last month may weaken or even reverse. Always check current values before making trading decisions.
Why Correlation Matters for Traders
Trading two highly correlated pairs simultaneously is effectively doubling your exposure to the same move. For example, going long EUR/USD and long GBP/USD often behaves like having a double-sized position because both pairs tend to move against the US Dollar together.
Conversely, pairs with negative correlation can be used for hedging. Understanding these relationships helps with diversification, risk management, and avoiding unintended concentration in your portfolio.
Common Correlation Pairs
- EUR/USD and GBP/USD— Typically positively correlated as both trade against the Dollar.
- EUR/USD and USD/CHF— Typically negatively correlated because the Dollar is on opposite sides.
- AUD/USD and NZD/USD— Strongly correlated as both are commodity-linked Antipodean currencies.