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Tesoro Stock on the Move in 2Q17: What's Driving It?

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Part 11
Tesoro Stock on the Move in 2Q17: What's Driving It? PART 11 OF 11

Correlation of Tesoro Stock with WTI in the Past Month

What is the correlation coefficient?

In this series, we have evaluated Tesoro’s (TSO) stock performance, moving averages, and nine-day price forecast based on its implied volatility. We also examined TSO’s analyst ratings, dividend expectations for the next quarter, valuations, and PEG ratio.

We also reviewed Tesoro’s short interest changes and institutional holdings levels. In this final part of the series, we’ll examine whether there is a fall in the correlation between TSO’s stock price and crude oil prices in the past one-month period.

Correlation of Tesoro Stock with WTI in the Past Month

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The correlation coefficient measures the association between two variables. A value between 0 and 1 indicates a positive correlation, a value of 1 indicates no correlation, and a value between -1 and 0 indicates a negative correlation.

We have considered the past 12-month and one-month price histories of Tesoro (TSO) and WTI (West Texas Intermediate).

Correlation of Tesoro stock with WTI

The correlation coefficient of Tesoro (TSO) versus WTI stands at 0.24. The correlation value for Tesoro (TSO) and oil prices show that Tesoro’s stock price moves in line with WTI prices to some extent.

As a result, changes in oil prices can explain ~24% of the changes in Tesoro’s stock price. However, this correlation has decreased to 20% in the past one-month period, indicating a further weakening of the correlation.

Peers’ correlation analysis

TSO’s peers don’t face the same situation, as they have seen a rise in correlation in the past one-month period. Marathon Petroleum (MPC), Valero Energy (VLO), and Phillips 66 (PSX) have seen a rise in their correlations by 0.23, 0.34, and 0.12, respectively, in the past one-month period. MPC, VLO, and PSX’s current one-month correlation readings with WTI stand at 0.60, 0.46, and 0.55, respectively.

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