After Dropping 10%, What Are The Chances ConocoPhillips Stock Will Rebound?

Crude oil prices observed sizable gains in the past quarter primarily due to OPEC’s decision to continue with production cuts and also the approval of multiple vaccine candidates. Interestingly, the shares of ConocoPhillips (NYSE: COP) have dropped by 10% in the past week culminating the rally driven by crude oil prices and OPEC+ curtailments. Trefis believes that the stock is a good pick to ride oil demand recovery considering strong capital preservation measures and figures indicated by our AI engine.

According to the Trefis Machine Learning Engine, which identifies trends in the company’s historical stock price data, ConocoPhillips stock will likely gain 2.2% over the next one month (21 trading days) considering the 10% drop in the past week (5 trading days). Notably, though, the stock is very likely to outperform the S&P500 over the next month (21 trading days), with an expected excess return of 0.5% compared to the S&P500.

But how would these numbers change if you are interested in holding ConocoPhillips stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test ConocoPhillips stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF COP stock moved by -5% over 5 trading days, THEN over the next 21 trading days, COP stock moves an average of 1.3 percent, which implies an excess return of 0 percent compared to the S&P500.

More importantly, there is a 58% probability of a positive return over the next 21 trading days and 48.6% probability of a positive excess return after a -5% change over 5 trading days.

Some Fun Scenarios, FAQs & Making Sense of ConocoPhillips Stock Movements:

Question 1: Is the average return for ConocoPhillips stock higher after a drop?

Consider two situations,

Case 1: ConocoPhillips stock drops by -5% or more in a week

Case 2: ConocoPhillips stock rises by 5% or more in a week

Is the average return for ConocoPhillips stock higher over the subsequent month after Case 1 or Case 2?

COP stock fares better after Case 1, with an average return of 3.9% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.6% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how ConocoPhillips stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold ConocoPhillips stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For COP stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for ConocoPhillips after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although COP stock appears to be an exception to this general observation.

COP’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for ConocoPhillips stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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