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How Correlations with Energy Commodities Impact Upstream Stocks

PART:
1 2 3 4 5
Part 4
How Correlations with Energy Commodities Impact Upstream Stocks PART 4 OF 5

Gas-Weighted Stocks That Could Avoid Natural Gas’s Weakness

Natural gas–weighted stocks

Below are the natural gas–weighted stocks that had the highest correlations with US crude oil active futures between September 1 and September 11, 2017:

  • Rice Energy (RICE): 88.8%
  • WPX Energy (WPX): 85.5%
  • Gulfport Energy (GPOR): 82.6%
  • Cabot Oil & Gas (COG): 74.7%
  • EQT Corp. (EQT): 74.1%

Rice Energy fell the least among the natural gas–weighted stocks in the past five trading sessions. It also had a higher correlation with oil (USL) (DBO) prices compared to natural gas prices. We’ll discuss the price performance of these natural gas–weighted stocks in the next part of this series.

Gas-Weighted Stocks That Could Avoid Natural Gas’s Weakness

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These natural gas–weighted stocks include upstream stocks from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) that have a minimum 60% production mix in natural gas.

Natural gas–weighted stocks that had the lowest correlations with crude oil prices follow:

  • Range Resources (RRC): 55.5%
  • Chesapeake Energy (CHK): 24.6%

Why crude oil is important to natural gas stocks

Crude oil impacts the entire energy sector. Moreover, natural gas prices frequently follow oil prices. So, in the short term, movements in crude oil could also be crucial for these natural gas–weighted stocks.

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