Sub-industries included in the index cover traditional upstream energy producer, which include Exploration & Production, Oil Services, Refiners and Renewables industries as well as energy consumers for which rising demand for energy may signal an opportunity for growth in revenue, which include a variety of industries such as Aerospace & Defense, Chemicals, Homebuilding, Metal Fabrication, Transportation and Water industries.
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Each security undergoes a correlation analysis of its total returns to the price return of Brent Crude over a variety periods from the most recent three months to the last five years. Those securities with high positive correlation in the top 40% for all time periods analyzed are eligible for inclusion.
BOON Burns Bright
The indexing methodology is intended to diminish the effect of the “boom and bust” periods of commodity cycles and attempts to diminish drawdowns while preserving upside potential.
“This balanced approach aims to mitigate downside capture typically associated with the ‘bust’ part of the commodity cycle while maintaining or possibly improving upside capture during the ‘boom’ part of the cycle,” according to TriLine Index Solutions.
For more information on the energy sector, visit our energy category.