NatGas vs WTI Correlation

3M correlation of NatGas vs WTI is 0.19, weak or mixed.

If NatGas and WTI print a high reading, sizing both as separate ideas overstates how different the bets are. Tap another cell for a different pair URL.

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NatGas vs WTI: 0.19, weak or mixed.

Pearson correlation of daily percent changes. Not a forecast and not your broker’s feed.

NatGas and WTI correlation explained

NatGas is the front month US natural gas future, quoted in US dollars per MMBtu. WTI is the front month US crude oil future, quoted in US dollars per barrel.

NatGas and WTI are both quoted in US dollars but serve different markets: NatGas is natural gas, driven by weather and storage and WTI is crude oil. Their link comes mostly from the dollar, inflation expectations and the growth outlook.

On the 3M window shown above, NatGas vs WTI reads 0.19: weak or mixed.

How to use NatGas WTI correlation for risk

  1. Pick a window. 1M reacts fast to news and is noisy; 3M is a common default; 6M and 1Y show the slower background link.
  2. Read the number. At 0.7 or above the two have moved strongly together, at minus 0.7 or below strongly opposite, and between minus 0.3 and 0.3 the link is weak or mixed.
  3. Size accordingly. If you plan to buy both NatGas and WTI and the reading is strongly positive, treat them as one position and split your usual risk between them. A long in one and a short in the other on a strongly positive pair partly cancel out.

Common correlation mistakes

  • Treating correlation as a constant. It changes with news, central banks and market regimes, so recheck it before each trade.
  • Assuming correlated means the same size move. NatGas and WTI can move in the same direction by different amounts, and their point values differ, so size each one from its own stop.
  • Using a negative pair as a perfect hedge. A hedge that only works part of the time still costs two spreads.
  • Reading a 1M number right after a big event as the new normal. Compare it with 3M and 6M first.

Educational content, not investment advice. Trading leveraged products such as CFDs and forex carries a high risk of losing money.

Frequently Asked Questions

On the 3M window shown above, NatGas vs WTI reads 0.19: weak or mixed. Correlation runs from minus 1 (always opposite) to plus 1 (always together). Switch between 1M, 3M, 6M and 1Y above for other windows.
NatGas and WTI are both quoted in US dollars but serve different markets: NatGas is natural gas, driven by weather and storage and WTI is crude oil. Their link comes mostly from the dollar, inflation expectations and the growth outlook. On the 3M window shown above, NatGas vs WTI reads 0.19: weak or mixed.
On the 3M window the reading is weak or mixed (0.19).
If the reading is strongly positive and you want to buy both, treat them as one bigger position and split your usual risk between them. If it is strongly negative, a long in both partly offsets. Always size each trade from its own stop.
Shorter windows react faster and are noisier. 1M or 3M is a common default for active trading; 6M and 1Y show the slower background link. Correlation can flip around big news.
Pearson correlation of daily percent changes from daily closing prices from public market data, over 1M (31 days), 3M (93 days), 6M (186 days), 1Y (370 days). It is a map of how they behaved, not a forecast or a broker quote.

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