Currency correlation
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Currency correlation is a statistical measure of how two securities move in relation to each other.
Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation coefficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move by an equal amount in the opposite direction. If the correlation is 0, the movements of the securities is said to have no correlation, they are completely independent. If one security moves up or down there is as good a chance that the other will move either up or down, the way in which they move in tandem is totally random.
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