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August 13, 2011

Correlation Analysis

Correlation analysis between pairs i trade based on the sample 10/28/2005 - 08/12/2011 (1511 obs).



GBPUSD
GBPNZD
EURUSD
EURJPY
GBPUSD
1



GBPNZD
0.6
1


EURUSD
0.3
-0.2
1

EURJPY
0.9
0.7
0.3
1

Notably, GBPUSD and EURJPY seem to move together most of the time. Also, EURJPY and GBPNZD are quite strongly bonded to move in the same direction. So that to keep in mind while considering trades!

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