GLOSSARY · CROSS-ASSET DIVERGENCE
OEDI
Oil-Equity Divergence Index
DEFINITION
A daily-updated research index measuring the macro sensitivity regime between WTI crude oil price behavior and U.S. equity conditions. The current version (v1.1) uses WTI-only regime classification to identify when oil becomes a structural headwind for stocks — without redistributing licensed equity index data.
Components & Weights
WTI Regime Score
Classifies WTI price behavior into four regimes (Calm, Rising, Stress, Extreme) based on 5-day and 20-day price changes, 20-day range position, and 20-day realized volatility. Each regime maps to a base score: Calm (15), Rising (35), Stress (65), Extreme (85). Source: EIA via FRED DCOILWTICO.
OVX-VIX Volatility Spread (Future Candidate)
Removed from v1.1. OVX (OVXCLS) and VIX (VIXCLS) on FRED are tagged Copyrighted: Citation Required (source: CBOE). This component will be re-evaluated once copyright compliance is confirmed. When active, it would add a +10 bonus when the OVX-VIX spread exceeds 20 points.
WTI Regime Classification Rules
| Regime | Conditions | Base Score |
|---|---|---|
| Extreme | Range position ≥ 85% AND (5D change ≥ 8% OR realized vol ≥ 40%) | 85 |
| Stress | Range position ≥ 70% AND (5D change ≥ 4% OR 20D change ≥ 10% OR realized vol ≥ 30%) | 65 |
| Rising | 5D change > 0 OR 20D change > 0 | 35 |
| Calm | Default (none of the above) | 15 |
Score Interpretation
| Score Range | Signal | Interpretation |
|---|---|---|
| 0–25 | STABLE | Oil not currently a macro headwind; low sensitivity regime |
| 26–50 | ELEVATED | Oil rising; monitor inflation and rates transmission |
| 51–75 | HIGH ALERT | Oil stress regime; elevated macro headwind probability |
| 76–100 | CRITICAL | Extreme oil stress + volatility divergence; high equity sensitivity |
Transmission Channels
OEDI tracks five channels through which oil shocks can transmit to U.S. equities:
Inflation Pressure
Higher oil lifts energy costs and headline inflation, affecting Fed policy expectations.
Rates Pressure
Persistent energy stress can tighten financial conditions or delay easing.
Margin Pressure
Higher transport and input costs can hurt non-energy sectors.
Risk Sentiment
Oil spikes tied to geopolitical stress often reduce risk appetite.
Sector Dispersion
Energy-linked equities may benefit even when broad indices face pressure.
Data Sources
| Input | Source | Series ID | Copyright |
|---|---|---|---|
| WTI Crude Oil | EIA via FRED | DCOILWTICO | Public Domain: Citation Requested |
| Brent Crude Oil | EIA via FRED | DCOILBRENTEU | Public Domain: Citation Requested |
| OVX (Crude Oil Vol) | CBOE via FRED | OVXCLS | Copyrighted: Citation Required (not used in v1.1) |
| VIX (Equity Vol) | CBOE via FRED | VIXCLS | Copyrighted: Citation Required (not used in v1.1) |
Equity Data Policy
IMPORTANT
OEDI intentionally does not redistribute licensed S&P 500 or Nasdaq-100 historical index data. No official equity index time series, charts, or cached index values are stored or displayed. All equity references on the tracker page are qualitative research commentary based on publicly known macro transmission mechanisms. This boundary is deliberate — the goal is to keep the page public-source, citable, and legally clean.
Why "Oil Up, Stocks Down" Is Not Always True
The oil-equity relationship is regime-dependent, not a fixed inverse correlation:
- In a demand-led expansion, oil and equities can rise together.
- In a supply-driven shock, oil can rise while equities weaken.
- In a policy transition, the relationship becomes unstable.
This is why OEDI measures the shock regime, not a timeless correlation coefficient.
Related Terms
Cross-Tool Interactions
OEDI × GODI
When OEDI shows oil stress, GODI reveals whether gold is absorbing the geopolitical premium. Shared variable: WTI crude oil.
OEDI × TOCI
TOCI measures yield-vs-oil inflation tension. When both OEDI and TOCI are elevated, oil is simultaneously pressuring equities and distorting the yield curve.
OEDI × FRFI
Sustained oil above $100 revives inflation, complicating the Fed easing path that equities rely upon. FRFI captures the rate-side fragility.