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.

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 >> 
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 >> 
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 does correlation affect the stock market?
Learn about the role correlation plays in prudent stock market investing, and how the correlation coefficient is used to ... Read Answer >> 
How do I find positive correlation in the stock market?
Learn how positive correlation is found in the stock market, how correlation is calculated and how positive correlation is ... Read Answer >> 
Does a negative correlation between two stocks mean anything?
Learn what the concept of negative correlation means, understand how it is generally calculated and see how it is used in ... 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
Correlation
In the world of finance, correlation is a statistical measure of how two securities move in relation to each other. 
Investing
Is the Stock Correlation Strategy Effective?
The synchronized movement among stocks and markets in recent years is challenging diversification. 
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. 
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. 
Trading
Managing Currency Exposure In Your Portfolio
The value of your investments is impacted by changes in global currency exchange rates. Find out how. 
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.

Correlation Coefficient
A measure that determines the degree to which two variable's ... 
Pearson Coefficient
A type of correlation coefficient that represents the relationship ... 
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 ... 
Inverse Correlation
A contrary relationship between two variables such that they ... 
Berry Ratio
The ratio of a company's gross profits to operating expenses. ...