Andeavor Stock and WTI: Pay Attention to the Q3 Correlation
What is the correlation coefficient?
In this series, we’ve evaluated Andeavor’s (ANDV) stock performance, moving averages, three-month price forecast based on implied volatility, analyst ratings, dividend expectation for 4Q17, valuations, and PEG1 ratio. We also reviewed short interest changes and institutional holdings levels. In this part, we’ll examine whether there’s a fall in the correlation between ANDV’s stock price and crude oil prices in 3Q17.
The correlation coefficient estimates the relationship between two variables. A value between 0 and 1 means a positive correlation, a value of 1 indicates perfect correlation, and a value between -1 and 0 indicates a negative correlation. We’ve considered the past 12 months’ and past three months’ price history for ANDV and WTI (West Texas Intermediate).
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Correlation of Andeavor’s stock with WTI
The correlation coefficient for Andeavor (ANDV) versus WTI stood at 0.06 in the past year. The correlation value for Andeavor (ANDV) and oil price reveals that Andeavor’s stock price moves in line with WTI prices marginally. However, this correlation fell to -14% in 3Q17, switching to a negative correlation.
Andeavor’s peers’ correlation analysis
The situation is also the same for ANDV’s peers, who have seen correlation falls in 3Q17. Marathon Petroleum (MPC), HollyFrontier (HFC), PBF Energy (PBF), and Delek US Holdings (DK) have seen correlations fall by 0.38, 0.26, 0.22, and 0.35, respectively, in 3Q17. MPC, HFC, PBF, and DK’s correlation with WTI stood at -0.14, -0.06, -0.16, and -0.13, respectively, in 3Q17.
- Price–to–earnings growth ↩