Correlation with US crude oil
On February 28–March 7, major energy ETFs had the following correlations with US crude oil April futures:
- the Alerian MLP ETF (AMLP): 17.4%
- the SPDR S&P Oil & Gas Exploration & Production ETF (XOP): -34.8%
- the VanEck Vectors Oil Services ETF (OIH): -37.2%
- the Energy Select Sector SPDR ETF (XLE): -57.5%
US crude oil April futures fell 1% in the trailing week. AMLP, XLE, XOP, and OIH returned 1.3%, -0.2%, -2.4%, and -3.7%, respectively. Except for AMLP, all of these energy ETFs ended in the red. Despite having a negative correlation with oil prices, the sentiments in the oil market might have dragged most of these energy ETFs.
In the trailing week, AMLP, XLE, OIH, and XOP had correlations with natural gas April futures of 73.6%, 73.3%, 71.8%, and 70.8%, respectively. Natural gas April futures rose 1.9%. Based on the returns, natural gas’s moves seem to have less of an impact on most of these energy ETFs.
Energy ETFs had the following correlations with the S&P 500 Index in the past five trading sessions:
- XLE: 90.4%
- OIH: 84.5%
- XOP: 81%
- AMLP: 2.5%
The S&P 500 Index (SPY) fell 1.3% in the trailing week. The broader market might have impacted most of these ETFs—based on the correlations. Usually, the sentiments in the broader market are more important to energy ETFs than oil prices. AMLP had lower correlations with oil and S&P 500 Index, which might be behind its rise in the trailing week.
Next, we’ll discuss oil’s correlation with the broader market.