Correlation between oil and stock market

Crude oil and stocks were tightly correlated — until recently. HSBC Crude oil and stocks used to have a tight relationship. They typically moved in the same direction, and strategists were quick to cite a decline in oil prices as one major reason for any stock market weakness.

For example, when stocks nosedived a year ago, on August 24, crude oil fell to a post-crisis low at the same time. Investors in stocks were watching the implications of lower prices on oil-producing economies, energy giants, and so on.

But that relationship may be over. Around July, the correlation between stocks and oil broke down, HSBC Global Equity Strategist Ben Laidler highlighted in a recent client note.

On Monday, crude oil prices continued to fall, with West Texas Intermediate crude futures for October delivery down 2.

Stocks and Oil Prices: Correlation Breakdown - WSJ

On Thursday, WTI emerged from a bear market. Chatter about a possible production-freeze agreement between OPEC producers at their meeting in Algeria in September was cited as one of the catalysts for the rally. But this rise — and any further episode of oil sell-offs or strengthening — may not matter that much to the stock market as a whole.

Cyclical stocks move in tandem with the economy's turn, while defensives are agnostic to its performance. The materials sector includes the oil and gas companies whose bottom lines are directly affected by the slightest movements in oil prices.

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Analyzing Tesoro's Correlation with WTI - Market Realist

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The relationship between oil and stocks has broken down. This is what happened the week in August when global markets plunged.

Correlation Between US Stocks And Dollar - Business Insider

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