Last month, I correlated oil, Natural Gas and broad equity market ETF’s to the Groundbreaking Energy BioIndex, an equally weighted index of 8 biofuels equities.
I have updated that correlation table for 2012 YTD as of April 3oth:
The correlation between Oil (USO) and the BioIndex weakened in April, while the BioIndex and UNG (Natural Gas) exhibited a slight positive correlation. Natural Gas still appears to be moving contrary to the broader market indices. This will be an interesting trend to monitor in May, as Natural Gas price action and technicals are suggesting a bottom and positive momentum (see graph below).
Compare this to last month’s correlation table.
Natural Gas prices suggested that support is forming at current price levels. With the BioIndex exhibiting some positive correlation with UNG, it will be interesting to see if the constituents of the BioIndex trace UNG upward, to the extent that UNG appreciates in May.
The BioIndex displayed negative price momentum in April, while UNG seems to be forming a bottom.