Re: Correlation Between Oil & Stock Indices
I would think that the price of oil has a correlation with commodity prices and inflation in general, and that is part of the reason why there may be an inverse correlation with stocks. Companies thrive when the raw materials are cheap and they can make a nice profit, and suffer when those same materials are expensive.
It does seem that we go through boom-and-bust cycles with commodities. When they are too cheap, people stop investing in them and eventually demand overwhelms supply; then you see overinvestment and the price drops back down.
Whakamole, who has quite a bit invested in commodities