Correlation

Correlation in forex refers to the statistical relationship between two currency pairs and how their price movements relate to one another. A positive correlation means the pairs tend to move in the same direction, while a negative correlation means they move in opposite directions. For example, EUR/USD and GBP/USD often share a positive correlation, while USD/CHF typically moves inversely to EUR/USD. Understanding currency correlations helps traders avoid overexposure to the same market risk, diversify their portfolio effectively, and identify potential hedging opportunities across related pairs.