“It’s not surprising that XLE has a lower standard deviation because it has more exposure to higher quality names that are less buffeted by oil and gas price volatility,” Glickman added.
Large oil & gas companies “are high-quality names, and those names have outperformed in down markets, such as in 2008 when the broader S&P 500 was down 37% on a total-return basis.” During that time, “integrated energy companies were only down about 22%, partly on a flight-to-quality theme,” Glickman said.
SPDR Energy Select Sector Fund
For more information on the energy sector, visit our energy category.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Max Chen contributed to this article.