In the recent years several commentators hinted at an increase of the correlation between equity and commodity prices, and blamed investment in commodity-related products for this. First, this paper investigates such claims by looking at various measures of correlation. Next, we assess what are the implications of higher correlations between oil and equity prices for asset allocation. We develo...

Commodity prices have increased sharply during the past fi ve years, which has provided a signifi cant boost to Australia’s terms of trade. This article places the recent commodity price boom in an historical context, drawing on an analysis of very long-run price series, and documents some unique features of the current price cycle. The article shows that over an extended period, at least until...