I guess correlations between two currency pairs are like Delta in options pricing. Right?
In that case when the market conditions change, the correlations also fluctuate and we can call this change is equivalent to Gamma in options world.
Suppose in a longer time frame like on daily chart the correlation is very high (either +ve or -ve) for some time......but you would notice that in lower time frames the value often comes near zero and then get backs to top/bottom of the range.
This indicates at those times the two pairs become temporarily un-correlated but because of strong fundamental or whatever reasons they will eventually get back to correlated relationship.
Can we explore and find out any opportunity to cash in from such deviations?
In that case when the market conditions change, the correlations also fluctuate and we can call this change is equivalent to Gamma in options world.
Suppose in a longer time frame like on daily chart the correlation is very high (either +ve or -ve) for some time......but you would notice that in lower time frames the value often comes near zero and then get backs to top/bottom of the range.
This indicates at those times the two pairs become temporarily un-correlated but because of strong fundamental or whatever reasons they will eventually get back to correlated relationship.
Can we explore and find out any opportunity to cash in from such deviations?