ExxonMobil’s stock performance
In the previous part of this series, we looked into ExxonMobil’s (XOM) segment-wise outlook for 3Q16. In this part, we’ll look at XOM’s stock performance before its 3Q16 results.
ExxonMobil’s (XOM) stock fell 19% from October 14, 2014, to January 20, 2016, due to a fall in crude oil prices. Since then, the stock has recovered due to firming crude oil prices as a result of global supply reductions and outages impacting the supply glut. XOM returns turned positive in mid-July.
ExxonMobil’s stock gained 5% until mid-July 2016 compared to October 2014. However, since mid-July, XOM has fallen 9%.
From October 2014 to October 2016, XOM fell 4.4%. The shares of XOM’s peers Statoil (STO), YPF (YPF), and ENI (E) fell 30%, 39%, and 29%, respectively, during the same period. The Vanguard High Dividend Yield ETF (VYM) has ~11% exposure to energy sector stocks.
ExxonMobil’s stock correlation to crude oil and natural gas prices
ExxonMobil’s stock shows a positive correlation to crude oil prices. The correlation coefficient of XOM’s stock versus WTI for the 12-month period stands at 0.55. The correlation coefficient shows the relationship between two variables. A correlation coefficient value of 0 to 1 shows a positive correlation, 0 states no correlation, and -1 to 0 shows an inverse correlation.
It also means that on an average, 55% of the movement in XOM’s stock price can be explained by changes in WTI prices. However, the correlation to natural gas is feeble, standing at 0.07. The strength of the correlation for XOM’s peers Suncor Energy (SU) and Statoil (STO) stands higher at 0.71 and 0.74, respectively.