Correlation And Forex Investments

Correlation and Forex funds investments must be well understood prior to making an investment.  The term “correlation” is used to describe the relationship between two Forex funds investments. Correlation will define how to investments are related to each other.  Correlation is measured by calculating the correlation coefficient. The correlation coefficient will always be a  ‐1.0 to +1.0. If the correlation coefficient is a negative number, the relationship between the two investments is negative; i.e., if one investment moves up, the other investment moves down.  A positive correlation coefficient is a positive number the investments will move in the same direction.  If the correlation coefficient is zero, this would mean the two investments are not correlated and an investor can expect them not to move together over time. Ideally and investors portfolio should have a correlation coefficient of close to zero as possible.  Forex investment funds will generally have a correlation coefficient very close to zero when compared to other investments.

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