Forex Correlation Matrix
Visualize how 20+ currency pairs move in relation to each other. Identify hidden risks, hedging opportunities, and diversification gaps.
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | NZD/USD | USD/CAD | EUR/GBP | EUR/JPY | GBP/JPY | EUR/CHF | AUD/JPY | CAD/JPY | NZD/JPY | GBP/CHF | AUD/NZD | EUR/AUD | GBP/AUD | EUR/CAD | GBP/CAD | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR/USD | 1.00 | 0.87 | -0.31 | -0.92 | 0.68 | 0.64 | -0.55 | 0.42 | 0.55 | 0.49 | 0.62 | 0.48 | 0.22 | 0.47 | 0.45 | 0.12 | 0.38 | 0.21 | 0.71 | 0.62 |
| GBP/USD | 0.87 | 1.00 | -0.18 | -0.83 | 0.72 | 0.61 | -0.62 | -0.26 | 0.53 | 0.72 | 0.48 | 0.57 | 0.38 | 0.52 | 0.68 | 0.18 | 0.15 | 0.35 | 0.55 | 0.72 |
| USD/JPY | -0.31 | -0.18 | 1.00 | 0.44 | 0.22 | 0.18 | 0.35 | -0.08 | 0.65 | 0.73 | 0.18 | 0.78 | 0.85 | 0.72 | 0.58 | 0.05 | -0.32 | -0.15 | -0.12 | 0.08 |
| USD/CHF | -0.92 | -0.83 | 0.44 | 1.00 | -0.65 | -0.58 | 0.52 | -0.38 | -0.48 | -0.38 | -0.42 | -0.38 | -0.12 | -0.35 | -0.32 | -0.15 | -0.28 | -0.18 | -0.62 | -0.55 |
| AUD/USD | 0.68 | 0.72 | 0.22 | -0.65 | 1.00 | 0.88 | -0.62 | -0.05 | 0.58 | 0.62 | 0.42 | 0.82 | 0.48 | 0.78 | 0.52 | 0.28 | -0.35 | -0.22 | 0.45 | 0.48 |
| NZD/USD | 0.64 | 0.61 | 0.18 | -0.58 | 0.88 | 1.00 | -0.55 | 0.05 | 0.52 | 0.55 | 0.38 | 0.72 | 0.42 | 0.85 | 0.45 | -0.22 | -0.18 | -0.12 | 0.42 | 0.42 |
| USD/CAD | -0.55 | -0.62 | 0.35 | 0.52 | -0.62 | -0.55 | 1.00 | 0.12 | -0.22 | -0.18 | -0.32 | -0.25 | -0.28 | -0.22 | -0.28 | -0.08 | 0.15 | 0.08 | -0.72 | -0.65 |
| EUR/GBP | 0.42 | -0.26 | -0.08 | -0.38 | -0.05 | 0.05 | 0.12 | 1.00 | 0.12 | -0.32 | 0.35 | -0.08 | -0.15 | -0.05 | -0.38 | -0.02 | 0.42 | -0.15 | 0.35 | -0.08 |
| EUR/JPY | 0.55 | 0.53 | 0.65 | -0.48 | 0.58 | 0.52 | -0.22 | 0.12 | 1.00 | 0.92 | 0.58 | 0.82 | 0.72 | 0.78 | 0.72 | 0.08 | 0.02 | -0.08 | 0.48 | 0.52 |
| GBP/JPY | 0.49 | 0.72 | 0.73 | -0.38 | 0.62 | 0.55 | -0.18 | -0.32 | 0.92 | 1.00 | 0.42 | 0.85 | 0.78 | 0.82 | 0.82 | 0.08 | -0.12 | 0.05 | 0.38 | 0.55 |
| EUR/CHF | 0.62 | 0.48 | 0.18 | -0.42 | 0.42 | 0.38 | -0.32 | 0.35 | 0.58 | 0.42 | 1.00 | 0.35 | 0.22 | 0.32 | 0.42 | 0.05 | 0.18 | 0.02 | 0.45 | 0.35 |
| AUD/JPY | 0.48 | 0.57 | 0.78 | -0.38 | 0.82 | 0.72 | -0.25 | -0.08 | 0.82 | 0.85 | 0.35 | 1.00 | 0.72 | 0.92 | 0.62 | 0.18 | -0.32 | -0.18 | 0.32 | 0.42 |
| CAD/JPY | 0.22 | 0.38 | 0.85 | -0.12 | 0.48 | 0.42 | -0.28 | -0.15 | 0.72 | 0.78 | 0.22 | 0.72 | 1.00 | 0.68 | 0.55 | 0.05 | -0.25 | -0.12 | 0.08 | 0.22 |
| NZD/JPY | 0.47 | 0.52 | 0.72 | -0.35 | 0.78 | 0.85 | -0.22 | -0.05 | 0.78 | 0.82 | 0.32 | 0.92 | 0.68 | 1.00 | 0.58 | -0.12 | -0.22 | -0.12 | 0.32 | 0.38 |
| GBP/CHF | 0.45 | 0.68 | 0.58 | -0.32 | 0.52 | 0.45 | -0.28 | -0.38 | 0.72 | 0.82 | 0.42 | 0.62 | 0.55 | 0.58 | 1.00 | 0.08 | -0.05 | 0.15 | 0.28 | 0.48 |
| AUD/NZD | 0.12 | 0.18 | 0.05 | -0.15 | 0.28 | -0.22 | -0.08 | -0.02 | 0.08 | 0.08 | 0.05 | 0.18 | 0.05 | -0.12 | 0.08 | 1.00 | -0.22 | -0.12 | 0.08 | 0.12 |
| EUR/AUD | 0.38 | 0.15 | -0.32 | -0.28 | -0.35 | -0.18 | 0.15 | 0.42 | 0.02 | -0.12 | 0.18 | -0.32 | -0.25 | -0.22 | -0.05 | -0.22 | 1.00 | 0.72 | 0.55 | 0.35 |
| GBP/AUD | 0.21 | 0.35 | -0.15 | -0.18 | -0.22 | -0.12 | 0.08 | -0.15 | -0.08 | 0.05 | 0.02 | -0.18 | -0.12 | -0.12 | 0.15 | -0.12 | 0.72 | 1.00 | 0.22 | 0.52 |
| EUR/CAD | 0.71 | 0.55 | -0.12 | -0.62 | 0.45 | 0.42 | -0.72 | 0.35 | 0.48 | 0.38 | 0.45 | 0.32 | 0.08 | 0.32 | 0.28 | 0.08 | 0.55 | 0.22 | 1.00 | 0.82 |
| GBP/CAD | 0.62 | 0.72 | 0.08 | -0.55 | 0.48 | 0.42 | -0.65 | -0.08 | 0.52 | 0.55 | 0.35 | 0.42 | 0.22 | 0.38 | 0.48 | 0.12 | 0.35 | 0.52 | 0.82 | 1.00 |
Strong Positive (+0.80 to +1.00)
These pairs move in the same direction. Trading both simultaneously doubles your exposure to the same market move. Example: EUR/USD and GBP/USD often have high positive correlation.
💡 Avoid doubling down — treat as one position for risk management.
Strong Negative (-0.80 to -1.00)
These pairs move in opposite directions. They can be used for hedging or to neutralize portfolio risk. Example: EUR/USD and USD/CHF are typically inversely correlated.
💡 Use for hedging — a long in one can offset losses in the other.
No Correlation (-0.20 to +0.20)
These pairs move independently. They provide genuine portfolio diversification. Example: EUR/USD and AUD/NZD may show low correlation.
💡 Best for diversification — positions are truly independent.
Comprehensive Guide to Forex Correlation
What is Currency Pair Correlation?
In forex, currencies are traded in pairs. Because the US Dollar is half of many major pairs, these pairs are naturally linked. Correlation measures how closely two pairs move in relation to each other. A correlation of +1.00 means they move perfectly together, -1.00 means they move perfectly opposite to each other, and 0 means there is no relationship.
How Correlation Impacts Portfolio Risk
Many traders unknowingly overleverage their accounts due to correlation. If you buy EUR/USD, GBP/USD, and AUD/USD simultaneously, you might think you have three diversified trades. In reality, because they are all highly positively correlated (they all short the USD), you essentially have one massive trade. If the USD suddenly spikes in strength, all three trades will lose simultaneously.
Using Negative Correlation for Hedging
Negative (inverse) correlation can be used to hedge your exposure. For example, EUR/USD and USD/CHF historically have a strong negative correlation (often around -0.80 to -0.90). If you go long on EUR/USD, and you want to partially protect yourself from a sudden USD spike without closing your trade, you could also go long on USD/CHF. Since they move inversely, a loss in one is partially offset by a gain in the other.
Frequently Asked Questions
Does correlation change over time?
Yes. Correlations are not static. Economic shifts, central bank policies, and geopolitical events can cause correlations to break down or reverse. A pair that had a +0.90 correlation last year might have a +0.40 correlation today. This is why you must check a live correlation matrix rather than relying on historical assumptions.
What timeframe should I use for correlation?
Your correlation timeframe should match your trading timeframe. Day traders should look at 1-Hour or 4-Hour correlations, while swing traders should analyze Daily or Weekly correlations. Intraday correlation can differ wildly from long-term correlation.
How can I find truly diversified trades?
Look for pairs that have a correlation coefficient between -0.20 and +0.20. These pairs move largely independently of each other. For example, trading EUR/USD alongside AUD/NZD or CAD/JPY often provides true diversification, meaning a loss in one is unlikely to cause a loss in the other.
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