July 22, 2008 - (Courtesy: Bespoke Investment Group) Below we highlight the rolling one-year correlation between the daily price changes (%) in oil and the S&P 500 Energy sector. As shown, from early 2004 through the middle of 2006, oil and oil stocks became more and more correlated. But after the peak in correlation in 2006, it has been steadily decreasing. Interestingly, the correlation increased during the first big run-up in oil from about $35 to $75. However, the most recent run-up from $60 to $140 has seen the correlation between oil and oil stocks decrease, as oil the commodity has left the stocks behind. For bubble theorists, this decline in correlation helps their argument because it shows that the commodity has taken on a life of its own. It will be interesting to see how this relationship does going forward.
Related Posts
Fidelity: Economic outlook: Second quarter 2024
by Dirk Hofschire, CFA, Senior Vice President, Asset Allocation Research, et al, Fidelity Viewpoints Global expansion broadened and…
Demystifying private equity valuations
by Dan Fletcher, Russell Investments Executive summary: Most private equity managers rely on three common approaches to valuation:…
Google’s Dividend Debut Sparks Buzz
by Professor Jeremy J. Siegel, Senior Economist to WisdomTree and Emeritus Professor of Finance at The Wharton School…
The Worst Malinvestment
by Brian Wesbury, Chief Economist, & Robert Stein, Deputy Chief Economist, First Trust Portfolios Austrian Economics argues that…
International Business Machines - (IBM) - April 29, 2024 (Daily Stock Report)
by SIACharts.com SIA Charts’ Relative Strength rankings not only help investors to identify which stocks in a universe…
Riding the Momentum - Looking Beyond the Tech Giants
by Raffaele Sevi and Jeff Shen, Systematic Investing, BlackRock After a strong start to the year, equity investors…
Above the Noise: Is inflation obsession overblown?
by Brian Levitt, Global Market Strategist, Invesco Key takeaways Too much focus on inflation? - Stocks may benefit…
Between the Lines
by Samuel Rines, Macro Strategist, Model Portfolios, WisdsomTree Key Takeaways The NFIB Small Business Survey has consistently shown…