In this part, we’ll compare Newfield Exploration’s (NFX) recent stock movement with respect to movements in the broader market, crude oil prices, natural gas prices, and the US Dollar Index (or USDX).
As we saw earlier in this series, NFX’s stock has increased by 10% YoY (year-over-year). By comparison, peers Concho Resources (CXO) rose by 0.13% and Cimarex Energy (XEC) fell by 2.5% in the same period.
Recent trends in NFX stock
As we saw in Part 1, NFX stock has been on a recent uptrend, mirroring crude oil and natural gas price movements. However, the correlation coefficient between Newfield Exploration’s stock price and WTI’s (West Texas Intermediate) price (USO) from June 2015 to the present is ~0.62. This indicates a strong positive correlation between the two.
The correlation coefficient between Newfield Exploration’s stock price and the price of natural gas (UNG) from June 2015 to the present is ~0.12. This also indicates a positive, but far lower, correlation between the two.
The above graph shows that NFX stock has produced higher returns than natural gas and WTI on a YoY basis. When compared to the broader market, or the S&P 500 ETF (SPY), NFX has again clearly overperformed. SPY has returned -0.58% since June 2015.
NFX is negatively correlated to the US dollar index. Since June 2015, USDX has returned about -2%.
In the final part of our series, we’ll explore what institutional holders see in NFX in addition to short interest trends in the stock.