Natural Gas Determines Gas-Weighted Stocks’ Movement



What’s the correlation?

In this part, we’ll continue looking at upstream companies that are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). We’ll look at upstream companies that operate with a production mix of at least 60% natural gas (UNG) (BOIL) (UGAZ).

Below are upstream companies that had the highest correlations with natural gas futures over the past month between May 20 and June 20.

  • Rice Energy (RICE) – 47.5%
  • Memorial Resource Development (MRD) – 45.3%
  • Cabot Oil & Gas (COG) – 43.2%
  • Range Resources (RRC) – 40.8%
  • Antero Resources (AR) – 38.9%
  • Gulfport Energy (GPOR) – 38.3%
  • Southwestern Energy (SWN) – 36.5%

Natural-gas weighted stocks that had the least correlation with the natural gas over this period were:

  • Rex Energy (REXX) at -14.5%
  • EXCO Resources (XCO) at -21.4%

Rex Energy and EXCO Resources had inverse correlations with natural gas futures.

In the past, these natural gas–weighted stocks with high correlations to natural gas futures usually moved with natural gas. Stocks with low correlations weren’t impacted as much by natural gas price movements. Those with inverse correlations moved in the opposite direction from natural gas.

In the next part, we’ll see how gas-weighted stocks performed compared to natural gas.

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