“Generally there is a low correlation of 0.28 between non-energy and energy commodities, using daily data back to Jan. 2, 1987. Recently, the correlation has been rising, and while not excessively high, the pace at which it is increasing is noticeable. On Jan. 13, 2017, precisely two months ago, the 30-day correlation between the S&P GSCI Energy and S&P GSCI Non Energy was -0.11, increased to 0.05 by Mar. 1, and is now 0.35, going from uncorrelated to moderately correlated in a short time,” according to S&P Dow Jones Indices.
Even some of the commodities that historically perform well in the face of oil declines are currently slumping. For example, corn, which often endures oil weakness pretty well, is faltering. The Teucrium Corn Fund (NYSEArca: CORN), the only corn-specific ETF on the market, is off 4.1% over the past week.
“Normally several of the agriculture and livestock (coffee, soybeans, wheat, live cattle, lean hogs and corn) do well on average when oil drops. Historically, corn holds up best, gaining 56 basis points on average in months oil falls. Further, none of the non-energy commodities typically lose more than 1% in an average month that oil loses, but now the losses are substantial with greater than 1% drops month-to-date in 12 of 13 non-energy commodities that are down with oil,” according to S&P Dow Jonnes.
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