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The impact of oil on equity returns of Canadian and U.S. Railways and airlines

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  • Killins, Robert N.

Abstract

The purpose of this paper is to investigate the relationship between oil price movements and equity returns of railways and airline in Canada and the U.S. Using a robust set of oil measures, which includes both West Texas Intermediate (WTI) and Western Canadian Select (WCS) data, this research finds that railways and airlines react uniquely to oil price movements. Specifically, equity returns of railways in Canada and airlines in the U.S. tend to be negatively impacted by positive movements in WTI. Equity returns of airlines in Canada and railways in the U.S show limited evidence of any impact. Additional estimations suggest that equity returns of airlines react asymmetrically and that information regarding oil price movements may gradually diffuse over time. With the changing North American energy landscape (e.g., oil sands and shale oil), the increased reliance on transporting crude oil via railways should lead academics and practitioners to further research in this area.

Suggested Citation

  • Killins, Robert N., 2020. "The impact of oil on equity returns of Canadian and U.S. Railways and airlines," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:ecofin:v:52:y:2020:i:c:s1062940820300759
    DOI: 10.1016/j.najef.2020.101178
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    More about this item

    Keywords

    Transportation; Airlines; Railways; Oil; Equity returns; CAPM;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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