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What We Learned about Weatherford on September 8

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Part 3
What We Learned about Weatherford on September 8 PART 3 OF 3

Tracking Weatherford’s Correlation with Crude Oil as of September 8

Correlation between crude oil and Weatherford

The correlation coefficient between WTI (West Texas Intermediate) crude oil prices and Weatherford International’s (WFT) stock price from September 8, 2016, to September 8, 2017, is 0.44. This shows that Weatherford International and crude oil prices have had a steady correlation over the past year.

Tracking Weatherford&#8217;s Correlation with Crude Oil as of September 8

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What else does Weatherford’s correlation with crude oil mean?

A high correlation may not be helpful for Weatherford’s stock price if crude oil prices’ current downward bias continues. WFT’s correlation with crude oil prices is lower in the trailing year as of September 8, 2017, compared with the previous year up to September 8, 2016.

By comparison, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil is nearly the same in the trailing year up to September 8, 2017, as it was during the previous year up to September 8, 2016.

Correlation between WFT’s peers and crude oil

The VanEck Vectors Oil Services ETF’s correlation with crude oil since September 8, 2016, is 0.71. Halliburton’s (HAL) correlation coefficient since September 8, 2016, is 0.65, while Patterson-UTI Energy’s (PTEN) correlation coefficient since September 8, 2016, is 0.65. Oceaneering International’s (OII) correlation coefficient during the same period is 0.57.

A higher correlation with crude oil would imply that these stocks would be more impacted by movements in crude oil. On the other hand, a low correlation would mean that they aren’t as affected by crude oil’s movements.

You can learn more about this industry in Market Realist’s The Oilfield Equipment and Services Industry: A Primer.

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