JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Interrelationships Between Crude Oil Price Shocks, Stock Market, and Foreign Exchange Market: Evidence from USA Market
Author(s): Moustafa Abuelfadl
Citation: Moustafa Abuelfadl, (2020) "Interrelationships Between Crude Oil Price Shocks, Stock Market, and Foreign Exchange Market: Evidence from USA Market," Journal of Applied Business and Economics, Vol. 22, Iss.4, pp. 133-151
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This study investigates the inter-relationships between three different markets – the stock market (S&P500), the Brent oil market, and the foreign exchange market (FX), during different Brent oil price shock periods. We examined mean-reverting properties for Brent oil prices and the volatility relationships between the three markets using the constant conditional correlations (CCC) model, the dynamic conditional correlations (DCC), and the time-varying conditional correlations (VCC). We found evidence that there are arbitrage opportunities in the Brent oil markets and that there are volatility relationships between the three markets. The paper also concluded that there is a long-run dynamic equilibrium between Brent oil, FX, and S&P500.