How Natural-Gas-Weighted Stocks Correlate with Crude Oil
Natural-gas-weighted stocks and crude oil
Between June 19 and June 26, 2017, all gas-weighted stocks in the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) had higher correlations with crude oil than with natural gas except Chesapeake Energy (CHK). CHK had the highest correlation with natural gas active futures in the week ended June 26, 2017, which we discussed in part three of this series.
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- Cabot Oil & Gas (COG): 94%
- Antero Resources (AR): 92.1%
- EQT (EQT): 86.6%
- Rice Energy (RICE): 85.7%
- Range Resources (RRC): 79.5%
A high correlation with crude oil active futures can be attributed to oil’s strong influence on the entire energy sector. Moreover, stronger oil prices also pose a threat to natural gas prices. But, in the long term, natural gas could be crucial for these gas-weighted stocks.
In the next part, we’ll discuss the returns of these gas-weighted stocks.