Why ConocoPhillips Is Highly Correlated With Crude Oil



ConocoPhillips’s stock performance

As we discussed previously, ConocoPhillips’s (COP) stock price fell ~9% in the week ended February 9, and the price of crude oil (USO) (SCO) fell almost 10%. Therefore, ConocoPhillips’s stock price seems to have followed crude oil prices. In this part, we’ll discuss the correlation between ConocoPhillips and crude oil.

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ConocoPhillips’s stock price correlation

In the week ended February 9, ConocoPhillips stock was highly correlated with crude oil, by ~91%. In other words, crude oil price volatility affected ConocoPhillips stock most days last week, which makes sense as ConocoPhillips’s production mix contains almost ~62% liquid (crude oil, bitumen, and natural gas liquid). Additionally, the company’s operational strategy is geared towards reducing North American natural gas production.

In the week ended February 9, ConocoPhillips’s correlation with natural gas and the SPDR S&P 500 ETF (SPY) was ~87% and ~80%, respectively, suggesting that their price movement was in sync most of the time.

ConocoPhillips’s correlation over the last month

ConocoPhillips’s stock has had a correlation of ~78%, ~88%, and ~94% with crude oil, natural gas, and the SPDR S&P 500 ETF (SPY), respectively, over the last month. For more on crude-oil weighted stocks, read Oil Is Falling: Analyzing Oil-Weighted Stocks.


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