Thread: Formula used to calculate the correlation value between pairs

http://www.myfxbook.com/forex-market/correlation Hello, does anyone know what formula they use to calculate the values on that link?

I'd be very grateful for your help.

If we have two X and Y series of size N, to calculate the correlation coefficient the following is done: The mean of X and Y is calculated. Xprom = SUMA(Xi)

Thank you.

And how do you do that short link thing?

https://lmgtfy.com/ So simple.

So, if I understand correctly, that correlation coefficient tells me how similar two pairs are in their movements, right? And what value is considered �high� or �strong�? +0.8? +0.9?

Exactly. The coefficient varies between -1 and +1. A value close to +1 indicates that both pairs move almost equal, and close to -1 moving in opposite directions. Any value above +0.8 or below -0.8 is already considered strong. Everything between -0.5 and +0.5 is weak or without clear relationship.

And those values are calculated based on what? Do you close daily? Do you see 1 hour? Because depending on the time frame, the correlation can change, right?

Very good observation. Yes, the correlation changes according to the time frame you analyze. Myfxbook allows you to see that in several deadlines: schedule, daily, weekly. Do not be guided by just one, compare several.