This paper introduces a method to monitor the wear of end milling tools in real-time production based on inter-insert periodic correlation. The aim is to detect abnormal behavior of the cutter as early as possible to prevent severe tool failure and subsequent losses. The approach takes advantage of the angular domain to segment the signal in periodic cycles of the same angular duration, which are then amenable to correlation analysis. An ordered separability index with latent correlation characteristics is proposed to assess the current operating state of the tool. A series of simulations with existing experimental data are run to test the feasibility of the proposed index and to calculate the corresponding confidence interval. This approach has a high potential to form an efficient tool condition monitoring system. Compared to the traditional teach-in method, this method is more independent of the cutting conditions (changes of velocity or direction) and has no requirement for a trial cut, making the method useful for small batch production and can reduce the rate of false alarms.