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What’s Limited Your Energy ETF Losses This Week?

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Jun. 14 2019, Updated 3:37 p.m. ET

Correlation with US crude oil

Between June 6 and 13, major energy ETFs’ correlation with US crude oil active futures was as follows:

  • the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), 88.5%
  • the Energy Select Sector SPDR ETF (XLE), 88.3%
  • the VanEck Vectors Oil Services ETF (OIH), 88.3%
  • the Alerian MLP ETF (AMLP), 69.9%

US crude oil active futures have fallen 0.6% in the last week, possibly dragging down or limiting XOP, XLE, OIH, and AMLP, which have returned -1.4%, 0.7%, 1.3%, and 0.7%, respectively. XOP, which has the highest correlation with oil, has underperformed other energy ETFs.

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Natural gas

In the last week, AMLP, XOP, XLE, and OIH have had a negative correlation with natural gas active futures, of 48.7%, 28.7%, 21.9%, and 19.8%, respectively. Natural gas active futures have been flat.

Equity markets

Energy ETFs’ correlation with the S&P 500 in the last week has been as follows:

  • XLE, 69.3%
  • OIH, 65.8%
  • XOP, 60.9%
  • AMLP, 31.3%

The S&P 500 (SPY) has risen 1.7% during the last week. These correlations and returns suggest broader markets have played a significant role in limiting energy ETFs’ downside. XLE, which had the highest correlation with the S&P 500, rose the second most among energy ETFs.

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