DrGood
commented on my post, asking whether the Canadian oil/gas royalty income trusts PGH, PVX,PWI aren't dangerous in a rising interest rate environment. My initial response was, I don't think so, because I'd always assumed that these high dividend payers (they're currently paying around 14% or so, though some of this is return of capital, since they are depleting assets) are correlated with the price of oil, not interest rates. But then I thought, hey, maybe I'm wrong (I am Just Another Loser on The Internet, after all) and maybe they will act more like preferred stocks and bonds and fall in price as rates rise.
So I looked at some charts on stockcharts.com. Let me simply line up the weekly price charts of PVX, the CBOT treasury index, and West Texas Intermediate Crude.
courtesy of
stockcharts.comLook and judge for yourself.
Maybe there is a bit more of a correlation with interest rates than I would have thought--look at the fall in treasuries in June-July 03 and the slide in PVX at the same time. Of course, Treasuries slid again in Apr 04, and PVX didn't change much.Surprising to me is that the correlation with crude prices is not as good as I might have thought, just by eyeballing it. Let me know what ya'll think.
1 comment:
Thanks for the charts. To me, the stock price chart did seem to indicate correlation with interest rates. It would make sense that the stock price would also be correlated with the price of oil.
I have just been afraid of these high yielders with interest rates at half century lows. May people look for high yielders but don't realize the risk they are accepting.
I had not done any statistical or chart anlysis of this, but just assumed it was true.
Just my thoughts.
Thanks
Post a Comment