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Why Southwestern Energy Has High Correlation with Natural Gas

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Dec. 14 2017, Updated 12:58 p.m. ET

Southwestern Energy’s correlations over the last one week

As we have seen in the previous part, Southwestern Energy (SWN) stock has fallen more than 9% in the last five trading sessions. During this time, natural gas (UNG) prices collapsed sharply by ~9.4%. Thus, it’s clear that SWN’s stock followed natural gas prices last week. In this part, we’ll quantify this correlation between SWN and natural gas prices.

For the last five trading sessions, Southwestern Energy’s (SWN) stock had shown a very high correlation of ~81% with natural gas (UGAZ) (DGAZ). In other words, volatility in natural gas prices affected SWN’s stock price strongly in the last five trading sessions. This trend is also in line with SWN’s production mix, which contains almost ~90% natural gas.

For the last five trading sessions, Southwestern Energy’s correlation with crude oil (USO) (SCO) and the SPDR S&P 500 ETF (SPY) was negative at about -13% and -25%. Thus, SWN’s stock price was indifferent to the movements in crude oil and the SPDR S&P 500 ETF (SPY).

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Southwestern Energy’s correlations over the last one month

Southwestern Energy’s stock has shown correlations of ~8%, ~93%, and ~-55% with natural gas (BOIL), crude oil (UCO), and the SPDR S&P 500 ETF (SPY) prices, respectively, over the last one month.

To know more about the correlation of various oil and gas producers with energy commodities, read Market Realist’s series Which Energy Stocks Are Avoiding the Downturn?

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