Among different currencies, the Euro (EUR), British Pound (GBP), and Swiss Franc (CHF) show the highest positive relationships. These correlations can be attributed to their geographic proximity within Europe, as well as their strong trading relationships and tourism ties.
When it comes to commodities, the Canadian dollar is strongly correlated with crude oil due to Canada’s heavy reliance on the oil industry. Historically, the Australian dollar (AUD) had a strong relationship with gold, but currently, the British Pound (GBP) shows the highest correlation with gold at 0.55.
While stocks and currencies are not typically closely linked, the Australian dollar (AUD) has a correlation of approximately 0.5 with the S&P 500. This could be influenced by various factors, such as global economic trends and investor sentiment.
Furthermore, the Australian dollar has a higher correlation with FXI, which represents Chinese large-cap stocks. This can be attributed to their geographic proximity and the Australian dollar’s liquidity compared to the Chinese renminbi (CNH).
It is important to note that correlations between various assets can change over time. These correlations can be influenced by factors such as economic conditions, geopolitical events, and market sentiment. Investors and traders often analyze correlations to gain insights into potential opportunities and risks in the financial markets.
