The USA Stock Market Performance and Its Correlation with Different Commodities and Currencies Since Pandemic

3 min readOct 23, 2020

S&P 500 and Dow Jones Historical Rates Since Pandemic

The COVID-19 crisis has been characterized by extremely volatile markets and extremely negative news coverage. There are three different phases of the U.S. Stock market changes since February :

The S&P 500 index plummeted by twelve percent between March 4 and March 11, 2020, dropping into a bear market. The S&P 500 fell 9.5 percent on March 12, its steepest one-day decline since 1987. At the start of April, the index started to recover.
After a violent February and March that ended the longest bull market on record, all three major U.S. stock indices have climbed for five consecutive months. Over that time, the benchmark S&P 500 has increased 35 percent. On September 2: the SPX index closed at a record high of 3580.84 after hitting an intra-day high of 3588.
From September, S&P 500 entered the market correction in some sectors including technology. At the end of September, the index started to recover.

In the candlestick and line charts below you can how SPX and Dow Jones change since February.

S&P500 Daily stock Returns

A statistical analysis of the distribution of returns can be used to determine many key characteristics of a stock’s behavior including volatility. You can see the chart of this changes in blow, if we sum up all those percentages we can get 0.12 which shows the stock market didn’t performed well since pandemic started overall.

Correlation

The table below shows correlation between the US stock indexes and different financial assets, commodities and currencies exchanges. Some explanation from the table:

It is obvious the SP500 and Dow Jones Industrial Average has strong correlation between each other(0.97). we see the same pattern between gold and silver (0.86)
There is the highest relationship between the Canada exchange (CADUSA) and the S&P 500.
In recent months, the Bitcoin’s price(BTSUSD) has been increasingly correlated with the S&P 500(0.89).
Recently relationship between the price of oil and the S&P 500 weakened in comparison to the first five months but still positive.
SP500 has the lowest correlation with Japan currency (JYPUSD)

Sectors performance

This table below shows SP500’s sectors performance in short term after the period of crash. As you can see, IT and consumer discretionary gained highly while energy was out performed in the last 6 month.

Conclusion

The stock market has been plunging as investors struggle to judge the impact of the coronavirus, a price war in oil and their impact on the global economy. The US equity markets might be breaching record highs, but the state of corporate distress in the country has never been worse. Large US corporate bankruptcy filings are now running at a record pace and are set to surpass levels reached during the financial crisis in 2009. Some of the stocks are overvalued and we might see another crash in 2021.