Correlation

Definición

Correlation measures the statistical relationship between two financial instruments on a scale from -1 to +1. A correlation of +1 means they move identically, -1 means they move in opposite directions, and 0 means no relationship. EUR/USD and GBP/USD are positively correlated, while EUR/USD and USD/CHF are negatively correlated. Understanding correlation helps avoid concentrated risk from correlated positions.