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What the Market Suggested about Weatherford on November 10

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Part 3
What the Market Suggested about Weatherford on November 10 PART 3 OF 3

How Weatherford Reacted to Crude Oil Prices

Correlation between Weatherford and crude oil

Between November 3, 2017, and November 10, 2017, Weatherford International’s (WFT) stock price correlation with the West Texas Intermediate (or WTI) crude oil price was -0.34, which indicates there was a negative correlation between Weatherford International and crude oil prices in the past week. WFT’s correlation with the Dow Jones Industrial Average (DJIA-INDEX) from November 3, 2017, to November 10, 2017, was also negative.

How Weatherford Reacted to Crude Oil Prices

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What does Weatherford’s correlation with crude oil mean?

The negative correlation between WFT and crude oil will not help Weatherford’s stock price if crude oil’s current upward push continues. WFT’s correlation with the crude oil price was negative during the week ending November 10, 2017, as opposed to a positive correlation in the week ending November 10, 2016.

The VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil was positive during the week ending November 10, 2017, but much lower than the correlation in the week ending November 10, 2016.

Correlation between WFT’s peers and crude oil

Flotek Industries’ (FTK) correlation coefficient since November 3, 2017, was -0.22, while Tidewater’s (TDW) correlation coefficient since November 3, 2017, was -0.27. Precision Drilling’s (PDS) correlation coefficient during the same period was 0.17.

A high correlation indicates the stock was impacted more by the movements in crude oil. On the contrary, a negative correlation means that the stock was affected by crude oil’s movement but in the opposite direction.

Learn about the OFS industry in Market Realist’s The Oilfield Equipment and Services Industry: A Primer.

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