Equity and commodity markets interact. But share prices affect commodities or vice versa? Or there is no dependency? For which commodities there are the highest dependency? Is it gold, oil, or any other commodity?
As you can see from the picture below there is a long term dependency in crude oil prices and equity indexes. In this relation mostly we can call equities as a trigger. Good performance of stock markets predict good future for economy and higher demand for energy like crude oil.
With gold we can see inverse correlation with equity indexes. Usually this commodity is seen as a safe heaven when there is uncertainty on the stock market.
And how the commodities are linked between each other. This table shows correlation between crude oil, gold, silver and platinum.
Second table with correlation between commodities and broad stock markets indexes.
As you can see from the picture below there is a long term dependency in crude oil prices and equity indexes. In this relation mostly we can call equities as a trigger. Good performance of stock markets predict good future for economy and higher demand for energy like crude oil.
With gold we can see inverse correlation with equity indexes. Usually this commodity is seen as a safe heaven when there is uncertainty on the stock market.
And how the commodities are linked between each other. This table shows correlation between crude oil, gold, silver and platinum.
Correlation (91-09) | Crude Oil | Gold | Silver | Platinum |
| Crude Oil | 1,00 | 0,81 | 0,90 | 0,82 |
| Gold | 0,81 | 1,00 | 0,95 | 0,95 |
| Silver | 0,90 | 0,95 | 1,00 | 0,93 |
| Platinum | 0,82 | 0,95 | 0,93 | 1,00 |
Second table with correlation between commodities and broad stock markets indexes.
Correlation (07-09) | Crude oil | DJIA | S&P 500 | Silver | Gold |
| Crude oil | 1,00 | 0,50 | 0,48 | 0,75 | 0,37 |
| DJIA | 0,50 | 1,00 | 0,99 | 0,37 | -0,48 |
| S&P 500 | 0,48 | 0,99 | 1,00 | 0,36 | -0,51 |
| Silver | 0,75 | 0,37 | 0,36 | 1,00 | 0,50 |
| Gold | 0,37 | -0,48 | -0,51 | 0,50 | 1,00 |
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