# Correlation of exchange rates

Correlation (from Latin correlatio - correlation, interrelation) is the relationship between two random variables. In this case, a change in one quantity leads to a change in the other and vice versa. The mathematical measure of the relationship between two random variables is the correlation ratio or correlation coefficient. The concept of correlation is also used in е to denote the dependence of the movement of currency pairs. Knowing the direct or inverse correlation between different pairs, the rise of one can predict the fall or rise of the other, given the time gap.

As in mathematical analysis, correlation in e There are parallel (positive) and mirror (negative) correlations. In case of parallel correlation the increase in price of one currency pair leads to the growth of the other and vice versa. In case of mirror correlation the growth of one currency pair leads to the decline of the other.

If currency pairs move in one direction and with the minimum time gap, the correlation coefficient will tend to 100%. If currency pairs move in different directions, the coefficient will be -100% accordingly. It should be noted that the closer the correlation coefficient is to 0, the less correlated the currency pairs are.