Correlation with US crude oil
On May 9–16, major energy ETFs had the following correlations with US crude oil active futures:
US crude oil active futures rose 1.9% in the trailing week. These ETFs have returned -0.8%, 1.8%, 1%, and 4.5%, respectively. AMLP had the lowest correlation with oil but outperformed other energy ETFs. The oil rig count at more than a one-year low is a concern for the oilfield services subsector.
In the trailing week, XLE, OIH, XOP, and AMLP had correlations with natural gas active futures of 20.3%, 15.8%, 11.9%, and -0.5%, respectively. Natural gas active futures rose 1.7% during the same period. Based on the correlations, these energy ETFs might have ignored natural gas prices.
Energy ETFs had the following correlations with the S&P 500 Index in the trailing week:
- XLE: 99.4%
- XOP: 98.9%
- OIH: 93.4%
- AMLP: 60.7%
The S&P 500 Index (SPY) rose 0.2% during this period. Given these correlations, slow movement in the broader market might have limited the upside in these energy ETFs. AMLP’s relatively lower correlation with the broader market could explain its outperformance. Earnings sentiments around midstream stocks might be behind AMLP’s lower correlation with energy commodities and the broader market.