The shares of Chevron Corporation (NYSE: CVX) have trended downward in recent weeks after the OPEC+ announced the easing of production curbs. Notably, the EIA expects WTI benchmark prices to average $65/bbl in 2021 and decline to $62/bbl in 2022 as rising production by OPEC outpaces demand. At $60/bbl of Brent, Chevron targets $150 billion of operating cash in the next five years with $75 billion allocated to capital expenses, around $50 billion for dividends, and $25 billion of excess cash. Given the $20 billion increase in long-term debt in 2020, the stock is unlikely to provide quick gains.
But how would these numbers change if you are interested in holding Chevron Corporation 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 Chevron 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 just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF CVX stock moved by -5% over five trading days, THEN over the next twenty-one trading days, CVX stock moves an average of 3.5 percent, with a 66.9% probability of a positive return over this period.
Also, given a -5% movement for the stock over five trading days, it has historically witnessed an excess return of 2.5% compared to the S&P500 over the next 21 trading days, with a 58.6% percent probability of a positive excess return.
Some Fun Scenarios, FAQs & Making Sense of Chevron Corporation Stock Movements:
Question 1: Is the average return for Chevron Corporation stock higher after a drop?
Consider two situations,
Case 1: Chevron stock drops by -5% or more in a week
Case 2: Chevron stock rises by 5% or more in a week
Is the average return for Chevron stock higher over the subsequent month after Case 1 or Case 2?
CVX stock fares better after Case 1, with an average return of 3.5% 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 1.7% 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 Chevron stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Chevron 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 CVX stock, the returns over the next N days after a -5% change over the last five 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 Chevron 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?
The average return after a rise is understandably lower than after 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.
CVX’s returns over the next N days after a 5% change over the last five 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 Chevron 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 that’s beaten the market since 2016.