And if you are very adept at inter market correlations and cointegration - you trade off of that knowledge. For example, there was a space of about 24 months where the CL futures contract and 6E futures contract moved, quite literally, tic for tic. I remember a space of about five years where the third month Eurodollar contract and the Japanese Yen moved tic for tic. In the Summer months, it wouldn't be unusual for the Unleaded Gasoline contract to lead the CL contract.
And when highly correlated instruments de-couple, it can also represent a very powerful signal. That's why I made my May 13 post here on this thread: "Crude firmer as a consequence of Saudi/UAE commercial vessel sabotage attacks - and in the face of another massive equities sell-off. Impressive. And bullish." And I was correct. I knew from experience that Crude Oil rallying modestly in the face of a massive 450 point sell-off in the Dow meant something very important. The correlation between Crude Oil and the broad market S&P 500 equity index (not an energy index) was about 95% up to that date.
Look at the chart:
Not really.
When I trade CL now, what and where the signals I use? Both Asian and Europe market are closed. Whatever happened with Brent is the past. I trade on news, yes, NEWS, not old news.
I look at the most recent econ news, reports, equity index, bond yields, Ag and other energy markets. They are more important than the old news on Brent.
The long term (6-month or so) correlation is not really useful. The lag is too long. It may be of some use if you trade terms. But that is out of fashion now.
