Creating an FX Correlation Heatmap in Python.

How to Create a Correlation Heatmap in Python to Aid in Currency Trading.

Correlations across different assets and markets is crucial to determine any directional bias and trigger for a trade. If we have a buy signal on one asset and a sell signal on another, but yet they are almost perfectly correlated then we know that one of the signals is wrong because empirically, we have the information that they move together in the same direction.

Correlation management is part of risk management and is an important part in it. In this article, we will se how to create a correlation heatmap so as to get quick glances at the current state of correlation between different FX pairs.

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