Modeling dynamic conditional correlations in WTI oil forward and futures returns
30.06.2006
Alessandro Lanza (Eni and Fondazione Eni Enrico Mattei), Matteo Manera (Fondazione Eni Enrico Mattei and Department of Statistics, University of Milan-Bicocca), Michaelย McAleer (School of Economics and Commerce, University of Western Australia)
Science Direct
"Finance Research Letters", Volume 3, Issue 2, June 2006
This paper estimates the dynamic conditional correlations in the daily returns on West Texas Intermediate (WTI) oil forward and futures prices from 3 January 1985 to 16 January 2004, using recently developed multivariate conditional volatility models. We find that the dynamic conditional correlations can vary dramatically, being negative in four of ten cases and being close to zero in another five cases. Only in the case of the dynamic volatilities of the three-month and six-month futures returns is the range of variation relatively narrow, namely.