As inflation has been on the minds of most investors and the U.S. dollar remains weak, many have turned to traditional hedges for inflation – namely oil. If oil continues to gather steam, it could influence the transportation exchange traded fund (ETF).

If oil prices continue to rise and the economy continues to slowly make a recovery, it could wind up benefiting the transportation sector in two key ways:

• It’s much cheaper to transport via railway than air
• It’s cleaner and more fuel-efficient to use railroads than diesel-powered 18-wheelers

Over the previously mentioned time span, FedEx (FDX) and Union Pacific (UNP) both have performed very well, posting double-digit gains.  In fact, the iShares Dow Jones U.S. Transportation Fund (IYT) is up nearly 34.6% over the last three months, despite being down 7.7% for the year; FDX is 9.2%; UNP is 8%.

• PowerShares Global Progressive Transportation (PTRP) is up 25.4% year-to-date

Some believe that this rally has been ignited in hopes of an economic recovery while others suggest that it is just investor optimism, states Don Dion of theStreet.com.

If you do want to grab exposure to transportation, remember to watch the trend lines, do your homework and stay diversified.

For more stories on transportation, visit our transportation sector.

Kevin Grewal contributed to this article.

Tags: IYT, PTRP, Sector ETFs, Transportation