Are Natural Gas–Weighted Stocks Avoiding Energy Commodities?


May. 23 2019, Published 8:05 a.m. ET

Natural gas–weighted stocks

The natural gas–weighted stocks on our list had negative correlations with natural gas June futures on May 15–22. The natural gas–weighted stocks mentioned here are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with production mixes of at least 60.0% in natural gas.

Except for Gulfport Energy (GPOR) and Chesapeake Energy (CHK), the remaining natural gas–weighted stocks had negative correlations with US crude oil prices. These two stocks had correlations of 31.6% and 19.8%, respectively, with US crude oil prices. Oil prices can have a significant impact on the entire energy sector not just on oil-weighted stocks. US crude oil prices are important in order to understand the US natural gas supply. Oil prices are often important for the energy sector’s general sentiment.

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Broader market

Based on the correlations, the broader market could be an important factor for these natural gas–weighted stocks. Except for Cabot Oil & Gas (COG), the remaining natural gas–weighted stocks had over 69% correlations with the S&P 500 Index (SPY) in the trailing week. Cabot Oil & Gas’s correlation with the S&P 500 Index was -6.8%.


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