Stock Correlations for January and February of 2010; Best Picks: Oil and Gas ETFs, and VIX

As february ended we computed the stock correlations for January and February. Correlations are extremely important for proper diversification of investments.

Among the best uncorrelated pairs for 2010 are:

• UNG and VIX (oil ETF and volatility index)
• USO and UNG (oil and natural gas ETFs)

We have identified USO and UNG as great uncorrelations in the past. The next time someone mentions that gas should trade as oil, and that the price of gas should be $x based on the price of oil, you know better.

Please note that correlation does not imply causality.

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