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These oversold energy stocks could be ready to rebound

George Manessis
David Turnley | Corbis | VCG | Getty Images

The Dow Jones Industrial Average eked out another all-time-high on Friday — its 11th record close in a row.

The S&P 500 also notched a new high and its longest winning streak in nearly a year.

But not all areas of the market are participating. Energy, the worst performing sector in the S&P this year, is down nearly 7 percent.

Using hedge fund analytics tool Kensho , CNBC looked for the most statistically oversold stocks in the energy sector, as measured by the stock's standard deviation.

Standard deviation is a measure of how spread out a data set is from its mean. In this exercise, the mean is defined as the stock's 50-day moving average.

From that statistical standpoint, the most oversold Energy stocks are Range Resources (RRC), Anadarko Petroleum (APC), Newfield Exploration (NFX) and Chesapeake Energy (CHK).

Kensho points out the most statistically oversold stocks — which also are most likely to see near-term gains.

Take Range Resources, which as of Friday was 3.27 standard deviations below its mean.

To put it into context, 99.7 percent of values along a normally distributed set falls within 3 standard deviations, so a number greater than 3 puts Range Resources in extremely rare trading territory.

Further, Kensho notes that the past seven times Range Resources has had a drop of this magnitude, the next move is at least half a standard deviation higher.

Disclosure: CNBC parent NBC Universal is a minority investor in Kensho



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