Currency Correlations?
Results 1 to 5 of 5
  1. #1
    Join Date
    Mar 2006
    Posts
    4

    Default Currency Correlations?

    Hello everyone,

    I know that the EUR/USD is strongly correlated to the USD/CHF, but what about the other pairs? How are they correlated?

    Also is it possible to use the correlations to your advantage? For example, if the USD/CHF moves faster in one direction, can you put an order in the opposite direction for the EUR/USD?

    Thanks for your help!

  2. #2
    You should check out http://www.mataf.net/en/analysis-correlation.htm

    It breaks down currency correlation for many pairs.

  3. #3
    Join Date
    Mar 2006
    Location
    USA
    Posts
    14
    Kathy Lien's new book "Day Trading the Currency Market" also has a really good section on currency correlations.

  4. #4
    Useful graphic info about correlations: UnderstandMarket.com - Correlations

  5. #5
    Another good link for looking into correlations is Oanda's FXCorrelations.

    Quote Originally Posted by Hunting4pips View Post
    Also is it possible to use the correlations to your advantage? For example, if the USD/CHF moves faster in one direction, can you put an order in the opposite direction for the EUR/USD?
    Using a regular forex broker you will have no real chance of taking advantage of any movements in pairs at the tick level. You need to be able to react to the ticks as they happen. It might allow you to better guage the momentum or activity in the correlated pairs, but arbitrage traders will have eliminated any potential for you to profit from small pip moves.

    For some further reading I would recommend finding out what happens when you try and make money doing a true hedge with three currency pairs: The Impeccable Hedge, also known as Triangular Arbitrage.

Forum Sponsors

Similar Threads

  1. How will the use of currency affect the Forex
    By trader in forum Newbie Island
    Replies: 14
    Last Post: 09-07-2015, 06:10 AM
  2. Replies: 2
    Last Post: 12-22-2010, 09:00 AM
  3. Replies: 2
    Last Post: 05-31-2010, 12:18 AM
  4. Good place to find current currency pair correlations?
    By dominoe239 in forum Newbie Island
    Replies: 3
    Last Post: 02-28-2010, 05:20 AM
  5. Shifts in Risk Appetite Alter Currency Correlations
    By DailyFx in forum The Analyst Arena
    Replies: 0
    Last Post: 10-05-2009, 03:30 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
"We learn wisdom from failure much more than from success. We often discover what will do, by finding out what will not do; and probably he who never made a mistake never made a discovery."
Samuel Smiles