Hess’s stock drivers
In this final part of our series on Hess Corporation (HES), we’ll compare the company’s stock movements with respect to movements in the broader market, crude prices, natural gas prices, and the US dollar index (or USDX).
As noted in Part 1 of this series, Hess’s stock has fallen by almost 26% year-over-year. Many upstream companies such as WPX Energy (WPX) and Apache (APA) have also taken a hit due to weak commodity prices. Year-over-year, their stocks have declined by 43% and 20%, respectively. All these companies make up ~10% of the iShares US Oil & Gas Exploration & Production ETF (IEO).
Recently, HES stock has been on an uptrend, mirroring crude oil price movements. In the image above, it’s clear that its performance has been driven mainly by WTI (West Texas Intermediate) crude oil prices.
The correlation coefficient between Hess’s stock price and crude oil prices (USO) from March 2015 to the present is ~0.6. This indicates a strong positive correlation between the two. The graph also indicates that HES stock has given slightly lower returns compared to WTI’s returns on a year-over-year basis.
When compared to the broader market, the S&P 500 ETF (SPY), HES has underperformed SPY. As we can see in the graph, HES is negatively correlated to USDX. Since March 2015, the USDX has returned about -3%.