Energy ETFs Could Be More Aligned to Equity Markets than Oil


Dec. 4 2020, Updated 10:53 a.m. ET


On February 15–22, 2018, energy subsector ETFs’ correlations with US crude oil April futures were:

  • the VanEck Vectors Oil Services ETF (OIH) at 58.2%
  • the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) at 10.3%
  • the Energy Select Sector SPDR ETF (XLE) at -21.4%
  • the Alerian MLP ETF (AMLP) at -84.9%

In the trailing week, OIH rose 0.5%—the only energy ETF on our list that closed in the green. US crude oil futures rose 2.6% during this period. Other energy ETFs like XOP, XLE, and AMLP fell 1.1%, 1.4%, and 4%, respectively, in the past four trading sessions.

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Natural gas

On February 15–22, 2018, our list of energy ETFs’ correlations with natural gas April futures were:

  • XLE at -82.6%
  • XOP at -65.9%
  • OIH at -54.2%
  • AMLP at -53.2%

During this period, natural gas April futures rose 2.1%.

Broader market

In the trailing week, these four energy ETFs’ correlations with the S&P 500 Index were:

  • XLE at 84.6%
  • AMLP at 80.9%
  • XOP at 61.7%
  • OIH at 28.4%

In fact, XLE, AMLP, and XOP closed in the red, which coincided with the 1% fall in the S&P 500 Index in the trailing week. Based on the correlations, these three ETFs might have moved more with the broader market than oil during this period. Oil prices might be a bigger factor for OIH.


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