How do correlations between currency pairs impact hedging strategies in forex?
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Correlations between currency pairs significantly influence hedging strategies in forex, allowing traders to use positive correlations to balance risks and negatively correlated pairs to buffer against volatility, thereby enhancing risk management and protecting investments.
Correlations between currency pairs impact hedging strategies by enabling traders to offset risks; strong positive correlations allow for direct hedging, while negative correlations offer diversification opportunities to manage risk.