oil vs stocks correlation
US stocks (S&P 500) · crude oil — +0.24 normally, +0.75 in crashes
- +0.24normally
- +0.75in crashes
- -0.33 ~ +0.841-year range
- 1.45positions if held 50/50
It disappears when you need it
Normally these two correlate +0.24. But over the 5% of weeks when US stocks (S&P 500) fell hardest, it rises to +0.75.
Diversification matters in the crash, not in the calm. This pair moves together exactly then, so the everyday number is the wrong one to trust.
The sign flips with the era
The one-year correlation swings from -0.33 to +0.84. Green is the stretches they moved together, red the stretches they moved apart.
So a single long-run average describes this pair badly. Which regime you are in right now matters more than the average.
Try it on your own portfolio
Opens with these two already entered. Add what you hold and the vs the rest and New columns answer whether to add one more.
Open with US stocks (S&P 500) · crude oilWeekly returns, 611 weeks since 2015, every price converted to USD. “Crashes” means the 5% of weeks US stocks (S&P 500) fell hardest. One sample, one window — not a promise about the future.