Commodity that is MOST pegged to oil price?

Discussion in 'Commodity Futures' started by rjd2, Feb 19, 2011.

  1. rjd2


    hi all, i have a question for you folks who are knowledgable regarding oil futures. of course, nearly everything in our modern economy is tied to oil costs in one way or the other, but im wondering what commodity that you would consider MOST pegged/reliant to the price of oil? food, real estate, transportation, manufacturing? if you were very confident that the price of oil will rise over the next 2-10 years, what's the first thing that you would be long? thanks for your thoughts.
  2. US dollar. The most powerfull oil/food especulator in the world is the FED.
  3. bone

    bone ET Sponsor

    Outside of the energy complex as of Friday's close it was the Goldman Sachs Commodity Index and the Canadian Dollar. ( Nymex WTI April Contract )
  4. bone

    bone ET Sponsor

    I would buy coal stocks and natural gas related stocks. A depressed hydrocarbon-based name.
  5. Swiss Franc futures
  6. bone

    bone ET Sponsor

    So so so so so so so so wrong.

    The Swiss Franc has a 71% correlation to WTI Crude Oil.

    As of yesterday's close, the Canadian Dollar has a 94.7% correlation to WTI Crude Oil.

    Is your trading this impulsive ?
  7. rjd2


    thanks guys.

    bone-im actually not a trader, and dont have any intention of TRYING to trade on it. i just hit a tipping point a few weeks back where i realized that im confident enough in rising oil prices over the next 6 months-10 years that i'd throw some money into whatever is most pegged to oil. i know this may seem elementary, but alot of competing theories have gotten thrown around in relation to peak oil.

    i was also peripherally hoping to pick up some ideas about what the "chain reaction" of higher oil prices will look like. obviously, transportation, and anything that is transported, will be affected, but im sure its more complex than just "higher prices at the pump!".
  8. Bone..can you share the link or document that shows current correlations between various futures contracts...thanks!
  9. Butterball


    I'd want to own oil MLPs.
  10. bone

    bone ET Sponsor

    Increase, my apologies... I use a combination of proprietary software tools and methodologies, and this expertise I use with my client work. There are about fifty of my clients who are avid ET readers (they never post, however, none of them) and they would be furious with me. Let me just say that the area of correlations between instruments and leveraging a strategy to exploit those relationships is a lasting and significant edge. We can model and spread trade the price differentials between two or more instruments, and we also can use lead/lag strategies for higher frequency intraday strategies. So, yes, your desire and curiosity in this arena is legitimate. In terms of an edge, it beats the crap out of any technical indicator I can think of or backtest against when compared to taking a directional play with a single product.
    #10     Mar 5, 2011