While many assets have some relationship with oil, there are varying degrees of correlation and even a few surprises. For example, Canadian equities are more correlated with oil than are the emerging markets and the US equities; Australian equities are barely correlated with oil, and China who is not nearly as big a producer as a consumer is moderately correlated with oil.

Gold and (Brent) oil are not as oppositely related as many think but have a weak-moderately positive correlation of 0.32. (Correlation of +1.0 is perfectly positive, indicating assets move in lockstep, correlation of 0 indicates no relationship, and correlation of -1.0 is perfectly negative, indicating opposite movement. Generally the more negatively correlated the assets, the more diversification.) While gold straddles the line between a low and moderately positively correlated relationship, a few other asset show more diversification historically.

Real estate and bonds show little relationship with oil with correlations of 0.18 (REITs), 0.07 (S&P Case Shiller) but VIX is the one asset with even moderately negative correlation with oil of -0.32.

This article was written by Jodie Gunzberg, global head of commodities, S&P Down Jones Indices.

© S&P Dow Jones Indices LLC 2013. Indexology® is a trademark of S&P Dow Jones Indices LLC (SPDJI). S&P® is a trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a trademark of Dow Jones Trademark Holdings LLC, and those marks have been licensed to SPDJI. This material is reproduced with the prior written consent of SPDJI. For more information on SPDJI, visit http://www.spdji.com