Coppers sharp fall has rekindled interest in what some used to call the metal with a PHD in economics.

What is the state of the relationship between copper and the S&P 500 or Shan hai Composite! Some "uick anal#sis shows lar e declines in copper ha$e not been reliable predictors of declines in either the S&P 500 or Shan hai Composite since %0&0. Copper and the S&P 500 Since %0&0' dail# returns for copper and the S&P 500 ha$e had a modest correlation of 0.()*. Shortenin the time frame to the last #ear drops the correlation to 0.%+0. , simple re ression of the dail# returns #ields a fairl# low - s"uared of 0.%%0. , ain' shortenin the hori.on to /ust the past #ear su ests a weakenin relationship. 0he - s"uared drops to 0.0)). 0he chart below shows rollin *01da# correlations of both dail# returns and 51da# returns for copper and the S&P. 0he correlation remains positi$e but has declined steadil# since 2% %0&%.

Copper and the Shan hai Composite ,ppl#in the same anal#sis to the Shan hai composite shows a sli htl# stron er correlation. Since %0&0' the correlation of dail# returns is 0.534. 5$er the past #ear' the correlation drops to 0.444. Simple re ression anal#sis shows an - s"uared of 0.&&& since %0&0. 0he - s"uared falls to 0.03+ o$er the past #ear. 0he chart of rollin *0 da# correlations is below. 0his also su ests the relationship has weakened in the past se$eral "uarters.

-ecent 6ar e Declines 7or Copper Since %0&0 there ha$e been %0 instances where copper had a 4 da# decline of 158 or worse. 0hese ha$e not been reliable leadin indicators of poor performance for the S&P 500. 9easurin from the low dail# close for Copper' o$er the followin &0 da#s the S&P has rallied 3).%8 of the time :&) or %& instances;. 0he a$era e &0 da# return for all %& instances was <&.(%8. , 401da# inter$al #ields similar results' with the S&P up 3).%8 of the time and an a$era e rall# of 4.&%8. -esults are more mi=ed when lookin at the Shan hai Composite. >n the &0 da#s after Coppers low close' the SHC59P rallied onl# (3.)8 of the time :&0 of %& instances; and the a$era e return was 10.%+8. 5$er the followin 40 da#s' the inde= closed hi her (3.)8 of the time with an a$era e chan e of 1&.538.