The correlation between any two variables (or sets of variables) summarizes a relationship, whether or not there is any realworld connection between the two variables. The correlation coefficient will always be between 1 and +1. These two extremes are considered perfect correlations. A negative coefficient means that the two variables, or sets of variables, will move in opposite directions (if one variable increases, the other will decrease); a positive coefficient will mean that the two will move in the same direction (as one increases, the other will increase).
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 20year 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.
A country's currency can become more valuable in relation to the rest of the world in two main ways: when the amount of currency units available in the world market place is reduced (for example, when the Fed increases interest rates and causes a reduction in spending), or by an increase in the demand for that particular currency. The fact that an increase in the U.S. dollar affects the value of American stocks seems natural, as U.S. dollars are needed to purchase stocks.
The value of American stocks, especially those that are included in market indexes, tend to increase along with the demand for U.S. dollars  in other words, they are positively correlated. One possible explanation for this relationship is foreign investment. As more and more investors put their money in U.S. equities, they are required to first buy U.S. dollars, which can be used to purchase American stocks, causing the indexes to increase in value.
For more insight, see Commodity Prices And Currency Movements and Using Currency Correlations To Your Advantage.

How do I calculate correlation between market indicators and specific stocks?
Discover how to calculate the correlation coefficient between market indicators and stock prices, a critical skill in technical ... Read Answer >> 
Can the correlation coefficient be used to measure dependence?
Understand the coefficient of correlation and its use in determining the relationship between two variables through the concepts ... Read Answer >> 
What is the difference between a copay and a deductible?
Learn how the correlation coefficient may be used to predict the relationship between the returns of two stocks, but also ... Read Answer >> 
How should I interpret a negative correlation?
Learn more about correlation and how businesses analyze variables. Find out how negative correlations are interpreted by ... Read Answer >> 
Which of the following statements are true with respect to the coefficient of determination ...
The correct answer is: c) (I) is incorrect because coefficient of determination will always be positive, whereas correlation ... Read Answer >> 
What are some examples of positive correlation in economics?
Learn the most common examples of positive correlation in microeconomics and microeconomics, including demand and price, ... Read Answer >>

Investing
What's the Correlation Coefficient?
The correlation coefficient is a measure of how closely two variables move in relation to one another. If one variable goes up by a certain amount, the correlation coefficient indicates which ... 
Investing
Understanding the Oil & Gas Price Correlation
Learn how the correlation between the commodity prices for natural gas and oil changed from 2004 to 2015 due to increased natural gas production. 
Financial Advisor
4 Reasons Why Market Correlation Matters
Learn about how correlation can be used to measure how broader markets move in relation to each other. See how correlation is used to manage risk. 
Insights
Prices of Stocks and Bonds Move More in Tandem
Correlation between stock and bond prices in the U.S. have reached a 10year high, reversing a broader trend of negative correlation. 
Investing
Calculating the Coefficient Of Variation (CV)
Coefficient of variation measures the dispersion of data points around the mean, a statistical average. 
Insights
Understanding Regression
Regression is a statistical analysis that attempts to predict the effect of one or more variables on another variable. 
Investing
S&P 500 Vs. Dow Jones ETF: Which is a Safer Investment? (SPY,DIA)
Learn about why the risks of investing in the ETFs that track the S&P 500 and the Dow Jones Industrial Average are very similar for investors. 
Investing
Explaining Autocorrelation
Autocorrelation is the measure of an internal correlation with a given time series. 
Investing
ETF Case Study: Do Utilities ETFs Protect in Down Markets? (XLU, VPU)
Explore the historical performance of large utilities ETFs relative to market indexes during bear markets to find out if utilities ETFs provide downside protection. 
Investing
Commodity Prices And Currency Movements
Find out which currencies are most affected by fluctuations in gold and oil prices, and improve your trading.

Pearson Coefficient
A type of correlation coefficient that represents the relationship ... 
Positive Correlation
A relationship between two variables in which both variables ... 
Coefficient of Determination
A measure used in statistical model analysis to assess how well ... 
Information Coefficient  IC
A correlation value that measures the relationship between a ... 
Benchmark For Correlation Values
A benchmark or point of reference chosen by an investment fund ... 
Berry Ratio
The ratio of a company's gross profits to operating expenses. ...