Currency correlation is a vital tool for forex traders, enabling them to identify connections between currency pairs and make informed decisions. This concept measures the relationship between two currency pairs, with correlation coefficients ranging from -1 (perfect negative correlation) to 1 (perfect positive correlation). Effective Strategies for Trading Currency Correlations 1. Diversification: Minimize risk by trading multiple, negatively correlated currency pairs. 2. Hedging: Utilize positively correlated currency pairs to protect against potential losses.