Correlation Part 1 | Vantage FX

Vantage FX (www.vantagefx.co.uk) explain how traders can use 'correlation' to learn more about one pair from the movements in another.

Correlation

In part 1 we look at how pairs can have similar price movements. A regression is carried out to see the relationship is between the 2 pairs over a period of time. From this correlation traders can establish if the 2 pairs should be traded separately in different directions or if similar movements should be reflected in one trade.