Correlation Between Currency Pairs

Currency pairs rarely move in complete isolation from one another. Because many pairs share a currency or respond to similar economic forces, their price movements can be correlated.

Positive and Negative Correlation

Two pairs are positively correlated when they tend to move in the same direction, and negatively correlated when they tend to move in opposite directions. Correlations are not fixed — they can strengthen, weaken, or even flip over time as market conditions change.

• Pairs sharing the same currency often show some degree of correlation
• Correlation can be measured and tracked using statistical tools available on many platforms
• Correlations tend to shift during periods of unusual market stress