Volatility raises investors’ concerns on energy and commodities

Energy is currently the number one ranked U.S. sector in terms of risk adjustments due to steep rise that has occurred over September.

Investors should be weary of the energy sector because although it is ranked first, it is highly volatile when it comes to investing in securities that experience steep, fast hikes like the energy sector has experienced.

No doubt, hopping into a quickly rising energy sector is like kicking a football. Oftentimes, investors pile in right before the football is pulled and they end up flat on their backs. This is true of any sharp or parabolic rise.

Commodity basket ETFs rank high in the U. S. economic system. Commodities can range from oil to natural gas, to corn, to livestock and gold.

The recent rise in the energy sector impacts commodities because several commodity-basket ETFs are heavily reliant on energy.

With as much as 55% of the ETF’s return coming from energy commodities such as natural gas, crude oil and heating oil. In other words, as energy goes, commodity baskets will follow.