Community Forex Questions
Correlation Calculator
Correlation calculators visually (using charts) represent the existence of an interconnection between movements in price of different trading pairs and calculate their correlation coefficients. Correlation coefficients indicate the degree of interconnectedness between selected pairs. Correlation coefficients range between -1 and +1. +1 (or any value close to it) indicates that the prices of the chosen pairs are moving in the same direction. -1 (or any value close to it) indicates that the prices of chosen pairs are moving in the opposite direction. The following correlation degrees are distinguished:
- weak (0 to +/- 0.2);

- low (from +/-0.2 to 0.4);

- average (from +/-0.4 to 0.7);

- high (from +/-0.7 to 0.9);

- strongest (from +/-0.9 to 1).
A correlation calculator is a useful analytical tool that helps traders make a sound decision when using a strategy that is based on diversification and hedging against risks.

Add Comment

Add your comment