Options Workshop

Crude Correlations

Options Workshop

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James joins Liz & Jenny to discuss recent research on the relationships between crude oil, the stock market, and equities in the crude oil sector.

They first look at the correltations between crude oil and the stock market, which are consistently possitive. Next, they look at the relationships between the oil services ETF (OIH) and crude oil or the stock market. Interestingly, both exhibit high positive correlations most of the time.

Lastly, the team isolated days where the stock market closed down, curde oil closed up, but OIH closed down (followed the market). The gang conclude that OIH is not perfect crude oil diversification and to be wary of adding long OIH to a portfolio of long equities.

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