Deals with currency pair correlations
- 9월 11, 2017
- by
Deals with currency pair correlations
Positive and negative correlation coefficient
Two currency pairs with a positive correlation can move in the same direction.
However, both of the exercises may not be the same.
For example, EUR / USD and GBP / USD pairs share a positive correlation.
That is, when the EUR / USD pair is on an upward trend, the GBP / USD pair will also be on an upward trend.
However, there may be no Pip movement in the GBP / USD pair for all Pip movements seen in the EUR / USD pair.
If the GBP / USD pair moves by one pip for every move of the Pip in the EUR / USD pair, both pairs have a positive positive correlation coefficient of +1.
If displayed as a percentage, it is displayed as 100%.
Likewise, the EUR / USD pair shares a negative correlation with the USD / CHF pair.
That is, if the EUR / USD pair is in an uptrend, the USD / CHF pair will fall in a downward trend.
However, the USD / CHF pair may not have a Pip fluctuation for all Pip movements seen in the EUR / USD pair.
Whenever the USD / CHF pair moves down by one pip against the rising pip movement whenever the pair is seen in the EUR / USD pair, there is a perfect negative correlation coefficient of -1 for both currency pairs.
If displayed as a percentage, it is displayed as -100%.
To successfully apply a correlation between two assets in a binary options transaction, the trader must know the following details:
- the nature of the correlation (positive or negative)
- Percentage of correlation (between +100 and -100)
Two currency pairs with a positive correlation can move in the same direction.
However, both of the exercises may not be the same.
For example, EUR / USD and GBP / USD pairs share a positive correlation.
That is, when the EUR / USD pair is on an upward trend, the GBP / USD pair will also be on an upward trend.
However, there may be no Pip movement in the GBP / USD pair for all Pip movements seen in the EUR / USD pair.
If the GBP / USD pair moves by one pip for every move of the Pip in the EUR / USD pair, both pairs have a positive positive correlation coefficient of +1.
If displayed as a percentage, it is displayed as 100%.
Likewise, the EUR / USD pair shares a negative correlation with the USD / CHF pair.
That is, if the EUR / USD pair is in an uptrend, the USD / CHF pair will fall in a downward trend.
However, the USD / CHF pair may not have a Pip fluctuation for all Pip movements seen in the EUR / USD pair.
Whenever the USD / CHF pair moves down by one pip against the rising pip movement whenever the pair is seen in the EUR / USD pair, there is a perfect negative correlation coefficient of -1 for both currency pairs.
If displayed as a percentage, it is displayed as -100%.
To successfully apply a correlation between two assets in a binary options transaction, the trader must know the following details:
- the nature of the correlation (positive or negative)
- Percentage of correlation (between +100 and -100)
0 개의 댓글:
댓글 쓰기