Correlation Matrix

Real-time pair correlation heatmap — institutions use correlations for hedging and avoiding overexposure

🏦 Institutional traders never have two highly correlated positions in the same direction. A EUR/USD long + GBP/USD long = double risk on USD weakness. Use this matrix to avoid hidden concentration risk.

	EURUSD	GBPUSD	USDJPY	AUDUSD	USDCAD	NZDUSD	EURGBP	EURJPY
EUR/USD	1.00	0.87	-0.62	0.75	-0.84	0.72	0.42	0.55
GBP/USD	0.87	1.00	-0.55	0.70	-0.78	0.65	-0.15	0.50
USD/JPY	-0.62	-0.55	1.00	-0.35	0.55	-0.30	-0.10	0.58
AUD/USD	0.75	0.70	-0.35	1.00	-0.72	0.92	0.15	0.40
USD/CAD	-0.84	-0.78	0.55	-0.72	1.00	-0.68	-0.20	-0.35
NZD/USD	0.72	0.65	-0.30	0.92	-0.68	1.00	0.15	0.06
EUR/GBP	0.42	-0.15	-0.10	0.15	-0.20	-0.43	1.00	-0.26
EUR/JPY	0.55	0.50	0.58	0.40	-0.35	0.34	-0.07	1.00

Legend: Strong Positive (0.7+) Moderate Positive Neutral Moderate Negative Strong Negative (−0.7)

💡 Institutional Correlation Rules

• Never hold two positions with correlation >0.80 in the same direction
• Use negative correlations for hedging (e.g., EUR/USD long + USD/CHF long)
• Correlations CHANGE during risk events — recalculate during volatility
• Portfolio maximum: 3 correlated positions combined ≤ 5% total risk
• Timeframe matters: 1H correlation may differ significantly from Daily