{"id":16705,"date":"2011-11-25T09:19:07","date_gmt":"2011-11-25T14:19:07","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=16705"},"modified":"2016-09-20T20:54:53","modified_gmt":"2016-09-21T00:54:53","slug":"reader-request-correlation-of-the-euro-and-sp-500","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2011\/11\/25\/reader-request-correlation-of-the-euro-and-sp-500\/","title":{"rendered":"Reader Request: Correlation of the Euro and S&P 500"},"content":{"rendered":"

We recently wrote about the high correlation<\/a> of the intra-day moves between the Euro and the S&P 500 index. A reader commented that they would like to know more about the longer term correlation of the two.<\/p>\n

cor \u00b7re \u00b7la \u00b7tion<\/em>\/\u00cb\u0152k\u00c3\u00b4r\u00c9\u2122\u00cb\u02c6l\u00c4\u0081SH\u00c9\u2122n\/<\/h3>\n\n\n\n
Noun:<\/td>\n\n\n\n\n
\n
    \n
  1. A mutual relationship or connection between two or more things.<\/li>\n
  2. Interdependence of variable quantities.<\/li>\n<\/ol>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    We went back and took a look at a few indices and put them against each other to see if there was something occurring that was simply a coincidence. Correlations will have a range of +1 to -1. If two prices move with together exactly, the correlation will show a +1. If they move exactly inversely, it will be -1. A random relationship is considered if the correlation is 0.<\/p>\n

    Follow @andrewhorowitz<\/a>