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Correlation of Foreign Integrated Energy Stocks with WTI in May 2017

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Correlation of foreign integrated energy stocks with WTI in May 2017

Foreign integrated energy stocks Total (TOT), Suncor Energy (SU), ENI (E), and Petrobras (PBR) witnessed a fall in their correlations with WTI in May. The correlation coefficient of TOT versus WTI stood at 0.11, lower than the one-year average of 0.54.

A lower correlation indicates a weak relationship between the movements of TOT and WTI. Only 11% of the changes in Total’s stock price in May 2017 could be connected to changes in WTI’s price. SU, E, and PBR also saw falling correlations with WTI.

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Future of oil prices

As crude oil prices are vital to integrated energy companies’ operations and stock prices (one-year average correlation coefficients), it is imperative to monitor the factors influencing oil prices. For a look at the possible direction of oil prices, please read Trader’s Game Plan: OPEC’s Epic Meeting, Fed, and US Supplies.

If you want to hold integrated energy sector stocks in your portfolio, you can consider the Vanguard Energy ETF (VDE). VDE has ~40% exposure to the sector.

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