certain currency pair rises, another currency pair falls? For example, it enables us to know whether two currency pairs are going to move in a similar way or not. Get the pricing data for your two currency pairs; say, GBP/USD and USD/JPY. It all comes down to exposure. Try and spot these changes in your trading account, it is the only way to get familiar with.
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A correlation of -1 implies the two currency pairs will move in the opposite direction 100 of the time. How do fund managers use correlation to create portfolio diversity?). Economies) or the hawkishness of the Bank of Canada. Equally, if you are long and short on different pairs then you could be over leveraged on one currency pair without even realizing. The one-year, six-, three- and one-month trailing readings give the most comprehensive view of the similarities and differences in correlation over time; however, you can decide for yourself which or how many of these readings you want to analyze.
Forex correlation pairs table