The Worst OFS Companies and Their Correlations with Crude Oil
In this part of the series, we’ll analyze the correlation between the worst OFS (oilfield services and equipment) companies and the price of crude oil. In a previous part of this series, we looked at the best OFS companies by expected earnings growth for 1Q17.
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The correlations of OFS companies and crude oil
The correlation coefficient between Schlumberger (SLB) stock and the price of crude oil from March 2016 to the present is 0.63. That indicates a strong positive relationship between SLB stock and crude oil. The correlation of the VanEck Vectors Oil Services ETF (OIH) and crude oil has been 0.72 since March 2016.
Core Laboratories’ (CLB) correlation coefficient with crude oil from March 2016 to the present is 0.57. For the same period, Nabors Industries’ (NBR) correlation coefficient is 0.62, and Oil States International’s (OIS) is 0.59.
Some of the companies we’ve covered in this series will be looking to improve their fundamentals in 1Q17, and others are expected to have weak performances. Wall Street analysts expect the top OFS companies to have positive returns in the next 12 months. We’ll take a look at that in the next part.