One of the big fears for the market is obviously an oil spike, possibly caused by a war with Iran.
Such an event would probably be bad for stocks (if oil surged) but given the market and economic momentum, people aren’t inclined to just bet against the market on the chance of this geopolitical event.
So here’s an idea from Barclays’ Sreekala Kochugovindan.
It shows the VIX (AKA: The fear index) vs. the price of Brent Crude during the period around the Iraq war.
They’re nicely correlated, as you can see, and so it’s reasonable to surmise that a conflict with Iran and an equivalent move in oil would prompt an equivalent move in the two measures.
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