I decided to perform a study which examined the relationship between DRYS which is the largest carrier of dry bulk goods by market cap vs some key ETFs. DryShips, Inc., engages in the ownership and operation of drybulk carriers and drilling rigs that operate worldwide. Its drybulk fleet principally carries drybulk commodities, including coal, iron ore, and grains; and minor bulk items, such as bauxite, phosphate, fertilizers, and steel products. DryShips also engages in the shipment of oil based products throughout the world. The ETF's I selected for the study were as follows IYM (Basic Materials), SLX (Steel), XME (Metals and Mining), OIH (Oil). All of these ETF's have exposure to stock holdings in the various sectors.
In the first chart below I divide the ETF Close Price by the DRYS Close Price for that day. These ratios achieved their low points in October29 2007 this coincided with a peak in DRYS. Note that IYM, SLX, XME and OIH peaked in August 2008 so that the peak in DRYS preceded the subsequent collapse in IYM, SLX, XME and OIH by ten months. The various ratios all achieved another peak in early March 09 which represented a major buying point in the markets. These ratios are once more achieving new highs as we speak which bodes well for for IYM, SLX, XME and OIH. I will analyze this line of thought further for my next posting when I will examine both the current and lagged returns of DRYS vs the ETF returns.
