Understanding the correlation between currencies can help you control your overall portfolio's exposure. Here's how the Correlation Matrix tool works at HF Markets.

HF Markets Correlation Matrix

Since the market is always moving, the relationship between currency pairs is also very dynamic. When one pair rises, it's common to expect another pair to fall.

To help you further, HF Markets offers a premium trading tool called Correlation Matrix. By using HF Markets Correlation Matrix, you can determine the relationship strength between different currency pairs on the market

Knowing the ins and outs of pair correlations can be useful, especially for you who want to do hedging. Plus, you'll be able to manage your overall portfolio's exposure.

But before that, let's take a look at how Correlation Matrix works in general.

 

What is Correlation Matrix?

Correlation Matrix is basically a tool to summarize the correlation between different variables and it's available in HF Markets.

The data is displayed in a table that consists of rows and columns that represent the variables, and each cell of the table shows the correlation coefficient.

In other words, the matrix is a powerful tool that describes the correlation between all pairs and summarizes the results in a table. In forex trading, Correlation Matrix is used to see the relationship strength between different currency pairs on the market.

By looking at the matrix, we can see whether two currencies are moving in the same, opposite, or completely random direction over some period of time. The connection is calculated into what's known as the correlation efficient whose value usually ranges from -1 to +1.

There are two types of correlations in forex, namely:

  • Positive correlation. If the correlation coefficient is positive, it indicates that the two currency pairs are moving in the same direction. For example, the EUR/USD and GBP/USD have a positive correlation, so if one rises, the other probably will too.
  • Negative correlation. If the correlation coefficient is negative, it signals that the two pairs are moving in the opposite direction. For example, the EUR/USD and USD/JPY have a negative correlation, so if one pair rises, the other probably will fall instead.

Forex correlation

From the image above, we can see that by using HF Markets Correlation Matrix, you can see how currency pairs respond to each other. The coefficient number can also tell you how strong or weak the correlation is. The bigger the number, the stronger the connection.

 

 

How to Use HF Markets Correlation Matrix

HF Markets (formerly known as Hotforex) is a widely known forex broker that has clients from over 100 countries and is regulated by several top-tier financial authorities.

A recipient of multiple prestigious awards, this brokerage firm offers a wide number of assets, including currency pairs, equities, and cryptocurrencies. It also presents a bunch of trading tools that suit beginners and professionals.

Particularly for forex traders, the broker's Correlation Matrix tool is definitely worth checking out. At HF Markets, the Correlation Matrix is displayed not only as numeric values (ranging from -100 to +100) but also as simple color-coding that allows you to easily identify strong and weak correlations at a glance.

You can also change the basis of the calculation, choose a time frame to work on and determine the number of historic bars depending on the time period you will be using.

Here's what the table looks like on the platform.

HotForex correlation matrix

Based on the table, there are some details you can gather, such as:

  • The Strength of the Correlation
    The table consists of different-colored cells and numbers, allowing you to see how strong or weak the correlation is. Additionally, it also allows you to highlight sub-sections of the grid and choose to focus on specific forex correlations.

  • "What If" Scenarios
    The Correlation Matrix tool allows you to calculate an average calculation between all of the currencies that you have open positions with. You can simply choose any number of currency pairs and calculate the average of the current correlations between them, allowing you to calculate the risk of your entire portfolio.

 

Forex Correlations Can Change

It is worth noting that correlations are not always the same. The high volatility of forex market sentiments and the global economy certainly affects the movements of currency pairs on the market.

As a result, the strong correlation that we see today may not reflect the longer-term link between pairs.

Correlations may change based on several causes, such as:

 

The Bottom Line

If you are planning to stay in the forex market for a long, then you must be aware of forex correlations. This allows you to trade more effectively and reduce the risks of losing money.

However, it's important to know that forex market correlations can change due to high volatility. This is why it's important to keep track of the correlations from time to time.

The Correlation Matrix tool can certainly save your time, as you can just simply look at the table before deciding to take any action. In addition, HF Markets offers several other tools to help improve your trading performance, such as Trade Terminal, Connect, and Trading Calculator. For more information on the broker, you can refer to the description below:

🌐 Website
www.hfm.com
Leverage
1:2000
💼 Regulation
💲 Min Deposit
$
Year Established
2010

Bonus offers
Trading contests
Free education
Personal manager
Trading by telephone
PAMM
Segregated accounts
Managed accounts
Affiliate program
Islamic accounts available
Compensation scheme
Negative balance protection
VPS
Copy trading
FasaPay
Neteller
Skrill
WebMoney
Wire transfer

HF Markets is an award-winning forex and commodities broker. Established since 2010, the company provides trading services and facilities to both retail and institutional clients. For more than 9 years in business, HF Markets has around 1,500,000 live accounts opened and 200 employees globally.

Based on its services, HF Markets can be regarded as middle-class category. Clients do not need to prepare a big deposit for joining to trade with this broker. Also, there are various account types, trading software, and tools to facilitate individuals and institutional customers to trade forex and CFD online.

HF Markets is a registered brand name of HF Markets (Europe). Based on the location, the company is regulated by various financial regulators. Here are the details:

  • HF Markets (SV) Ltd, registered in St. Vincent & the Grenadine as an International Business Company with the registration number 22747 IBC 2015.
  • HF Markets (Europe), authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with Licence Number 183/12.
  • HF Markets SA (PTY), is authorized and regulated as a Financial Service Provider (FSP) by the Financial Sector Conduct Authority (FSCA) in South Africa, under license number 46632.
  • HF Markets (Seychelles), incorporated under the laws of the Republic of Seychelles with registration number 8419176-1, regulated by the Seychelles Financial Services Authority (FSA) under Securities Dealer Licence number SD015.
  • HF Markets (DIFC) Ltd, authorized and regulated by the Dubai Financial Services Authority (DFSA) under license number F004885.
  • HF Markets (UK) Ltd, authorized and regulated by the Financial Conduct Authority (FCA) under firm reference number 801701.

If traders have more experienced, knowledgeable, and sophisticated trading environment, they can join to become Professional Clients, who can manage and assess their own risks. For that reason, these kinds of clients are granted access to more favorable rates but afforded lesser regulatory protections than retail clients.

Trading with HF Markets can enable traders to access a variety of trading instruments like CFDs on Forex, Cryptocurrencies, spot metals (gold, silver, and others), energies (oil and gas), commodities (such as coffee, copper, and sugar), indices, bonds, and popular shares such as Google, Apple, and Facebook.

HF Markets offers some of the tightest spreads in the market, starting from 0 pips in Zero Account. This broker quote major foreign exchange currency pairs to five decimal places. Therefore, traders have the opportunity to get more accurate pricing and the best possible spreads.

HF Markets receives numerous highly prestigious titles, including the huge honor of being ed to join the ranks of the World Finance Top 100 Global Companies. Others are Best Client Funds Security Global by Global Brands Magazine, Best Global Forex Copy Trading Platform by Global Forex Awards 2019, Fastest Growing Forex Broker Mena 2019 by International Business Magazine, and many more.

After opening an account in HF Markets, traders will obtain various forex trading platforms to accommodate all of their trading demands. Whether traders like to trade on desktop or prefer to trade on-the-go, they can use MetaTrader 4 on desktop (terminal, multi-terminal, and web terminal) and phone (iPhone, iPad, and Android).

Clients' funds are held in segregated accounts. Only major banks are used by Markets because they believe that successful traders have to give their full attention to their trading rather than worrying about the safety of their funds.

Traders do not need to worry about transaction fees when depositing and withdrawing. Transaction fees are not charged, and diversity of payment methods enable them to choose between Wire Transfer, Bank Card, and online payments (Neteller, iDeal, Sofort Banking, and Skrill). HF Markets ensures that traders make fast transactions 24/5 during the standard hours.

Traders can earn extra income by joining the affiliate program offered by Markets. Clients who join this program will get some advantages, such as 60% of Net Spreads based on the volume traded by sub-clients, up to $15 per a lot of net revenue, and many more. More information about HF Markets can be obtained on their official website which is supported in 27 languages.

From the review above, it can be concluded that HF Markets is one of the award-winning forex and commodities brokers. There are various account types traders can choose in HF Markets, and the broker itself becomes a favorite among traders for its low spreads. This condition is very suitable for traders with limited funds and a desire to get more opportunities to gain maximum profit.

 


HF Markets is a global Forex and Commodities broker that facilitates both retail and institutional clients. Previously known as HotForex in the brokerage industry, HFM has positioned itself as the forex broker of choice for traders worldwide through their various account types and trading tools. Furthermore, HF Markets allow scalpers and traders use Expert Advisors unrestricted.