Antero Resources (AR) had the highest correlation of 98.4% with crude oil active futures among gas-weighted stocks in the week ending July 17, 2017. On July 17, 2017, Antero Resources ignored a 1.3% gain in natural gas prices and closed ~0.3% lower. On the same day, US crude oil (USL) (DBO) August futures fell 1.1%.
Most importantly, Antero Resources had the second-lowest correlation with natural gas active futures in the week ending July 17, 2017, as we discussed in Part 3 of this series.
Other gas-weighted stocks that had the highest correlation with natural gas active futures are:
- Rice Energy (RICE) – 64.3%
- Chesapeake Energy (CHK) – 52.6%
- Gulfport Energy (GPOR) – 49.1%
- EQT (EQT) – 39.4%
In fact, Range Resources and Southwestern Energy had the highest correlations with natural gas futures in the trailing week, as we discussed in Part 3 of this series. The correlation between natural gas and crude oil futures was -4.4% in the last five trading sessions.
Why is the correlation important?
The entire energy sector track oil closely. Crude oil prices also impact natural gas prices. Most of these gas-weighted stocks had higher correlations with crude oil compared to natural gas prices in the trailing week. However, over a long-term period, natural gas could be the most important catalyst for these gas-weighted stocks.
In the next part, we’ll discuss the gas-weighted stocks’ returns.