What is currency correlation? How markets move together
By SendPay Business · · 2 min read
Correlation measures how closely two markets move together. In forex and crypto it helps people see when two positions are really the same bet, or when one market tends to move against another.
The scale
- +1: the two always move in the same direction by a matching amount.
- 0: no consistent link.
- −1: they always move in opposite directions.
Why changes, not prices
Correlation is usually worked out from period-to-period changes rather than raw prices. Two unrelated markets that both happen to trend upward would look strongly linked on prices alone, even though their day-to-day moves have nothing to do with each other.
Common examples
Pairs that share a currency often move together or opposite: EUR/USD and GBP/USD both have the dollar as the second currency, while EUR/USD and USD/CHF have it on opposite sides. Many coins have tended to move with Bitcoin.
The limits
Correlations change over time and can break down suddenly, often in a crisis. A strong past correlation isn't a promise, and correlation doesn't mean one market causes the other to move.
Where SendPay fits
SendPay doesn't offer trading. SendPay platforms let your customers hold GBP, EUR and USD and exchange between them at a fee you set, alongside transfers and branded Visa cards, powered by licensed partners.
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How do I work out correlation?
Paste two price lists into the free calculator.
Correlation calculator →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.