BAML 1 26 oil correlation

With Oil/Equity Correlation At Extreme, Hedge Risk With Spread Trade

As Bank of America Merrill Lynch commodity analysts predict “the conditions for a floor in crude oil prices are coming together,” expecting a recovery into the summer months with a $47 WTI crude forecast, auguring a bull case, a derivatives report notes opportunity. Such a rosy outlook also coalesces with another of their investment thesis prognostications from the derivatives team: The “Fed put” strike has shifted. This all occurs as price correlations between oil and equity markets are at an all-time high. In fact, the last time this . . .


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