Tuesday, February 21, 2017

Relationship between $ (USD) and the US stock market

If we compare the US Dollar Index (USDX), an index that tracks the value of the U.S. dollar against six other major currencies, and the value of the Dow Jones Industrial Average (DJIA), Nasdaq and S&P 500 over a 20-year period, the correlation coefficient calculated for the USDX versus the DJIA, Nasdaq and S&P 500, is 0.35, 0.39 and 0.38, respectively. Note that all of the coefficients are positive, which means that as the value of the U.S. dollar increases, so do the stock indexes, but only by a certain amount. Notice also that each coefficient is below 0.4, which means that only about 35% to 40% of the stock indexes' movements are associated with the movement of the U.S. dollar.

Read more: What is the correlation between American stock prices and the value of the U.S. dollar? | Investopedia http://www.investopedia.com/ask/answers/06/usdollarcorrelation.asp#ixzz4ZORdAV2M
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