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.
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.