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Trading data

Correlation: three positions, one bet

Opening three separate trades feels like diversification. If they are all dollar trades, it is one position at triple size.

How correlation works

Correlation runs from +1, where two instruments move together, to −1, where they move opposite. Currency pairs sharing a currency are correlated by construction; commodity currencies and their underlying commodities usually are too.

Common relationships

EURUSD and GBPUSD move together most of the time. USDCHF moves inversely to both. Gold and silver are strongly positive. Index CFDs across the same region are near-identical on risk-off days.

Managing it

Before adding a position, ask what the combined trade actually is. If the answer is "short dollar" three times over, size the group as one trade rather than each leg independently.