Oil and Stocks Are Matching Up

From Reuters:

Crude oil has this year shown the most marked correlation to equities in decades and at the same time displayed a negative correlation to the dollar.
U.S. crude has shown a daily correlation of 0.88 with the MSCI world equity index .MIWD00000PUS since March 9, when the index touched its lowest since 2003.
“It depends how you measure it, but we are currently witnessing one of the strongest sympathetic periods in four decades, particularly with regards to the correlation between oil and the stock market,” said Francisco Blanch of Banc of America Securities-Merrill Lynch.

Here’s a look at the S&P 500 and the Oil ETF since the beginning of the year:

Posted by Eddy Elfenbein on August 3rd, 2009 at 10:03 am

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