The impact of oil on equity returns of Canadian and U.S. Railways and airlines |
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| Affiliation: | 1. Department of Business and Economics, Faculty of Business and Economics, University of La Rioja C/ Cigüeña 60, 26004 Logroño, La Rioja, Spain;2. Department of Financial Economics, Faculty of Economics, University of Valencia, Avenida de los Naranjos s/n, 46022 Valencia, Spain;1. Indian Institute of Management Kozhikode, IIMK Campus P.O., Kozhikode, Kerala 673570, India;1. Universitat de València, ERI-CES and Ivie, Spain;2. University of Birmingham, United Kingdom;3. Universitat Jaume I, IIDL and Ivie, Spain;1. College of Business, University of Michigan – Dearborn, Dearborn, MI 48126, USA;2. Faculty of Business and IT, Ontario Tech University, Oshawa, ON L1G 0C5, Canada |
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| 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. |
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| Keywords: | Transportation Airlines Railways Oil Equity returns CAPM G11 L92 L93 Q40 |
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