uncorrelated pairs for risk control and focus

hey guys,

what pairs are uncorrelated?

my reason for asking being that I want to make shortlist of pairs that I want to trade and watch...something like a watchlist...

i want them to be uncorrelated...

first, for risk control....

second, for the proper allocation of efforts in drilling down and monitoring the nuances of each individual pairs...

any help, advice would be appreciated...

I suggest you test everything, including the correlation of the pairs that you have available on the time frame you require. Correlation is time frame dependant. So depending on the time frame that you use to trade, you may need to run your own correlation tests. This can be easily done by downloading data into a spreadsheet for the symbols you wish to test, then running a correlation statistic on the pairs being tested.

The easy way is to scan through the list found on Mataf that has currency correlations:

http://www.mataf.net/en/tools/01-01-correlation

To think about:

I assume you are going to measure correlation of price changes rather than price itself.
1. Do i measure daily, 3 days, 5days 1 month correlation?
2. If I trade GBPJPY and USDCHF, fundamentally it should be less correlated than GBPUSD+USDCHF or GBPUSD+USDJPY but is the result going to be better?
3. Do i need to consider measuring open P/L of each different pair generated by my system or am i just satisfied measuring just correlation of price changes
4. Can i accept the fact that correlation is not stationary and everything becomes correlated when **it happens. Just look at the end of 2008.

noted...will ponder on those points real hard...

thanks