Correlation of Andeavor Stock with WTI: Did It Rise in 4Q17?
In this series, we have evaluated Andeavor’s (ANDV) refining margin in 3Q17, refining index values in 4Q17, and regional refining crack spreads in 4Q17. We also studied Andeavor’s leverage and cash flow trend.
We reviewed Andeavor stock performance, moving averages, 28-day price forecast based on its implied volatility, and analyst ratings. We also examined ANDV’s dividend expectations for 1Q18, valuations, and PEG ratio.
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We also reviewed Andeavor’s short interest changes and institutional holdings levels. In this part, we will explore whether there is a rise in the correlation between ANDV’s stock price and crude oil prices in 4Q17.
What is the correlation coefficient?
The correlation coefficient estimates the relationship between two variables. A value between 0 and 1 means a positive correlation, a value of 1 indicates a perfect correlation, and a value between -1 and 0 indicates a negative correlation.
We have considered the price history of ANDV and WTI (West Texas Intermediate) in the past three months and the past 12 months.
Correlation of Andeavor stock with WTI
The correlation coefficient of Andeavor (ANDV) versus WTI has stood at 6.0% in the past one-year period. The correlation coefficient for ANDV and oil price shows that Andeavor’s stock price moves marginally in line with WTI prices.
However, this correlation coefficient has increased to 11.0% in 4Q17, indicating a strengthening of the correlation.
Correlation analysis of peers
This condition is also the same for ANDV’s peers, which have seen a rise in correlation in 4Q17. Marathon Petroleum (MPC), HollyFrontier (HFC), PBF Energy (PBF), and Valero Energy (VLO) have seen increases in their respective correlations of 4.0%, 3.0%, 3.0%, and 8.0% in 4Q17.
MPC, HFC, PBF, and VLO’s correlations with WTI stood at 21.0%, 19.0%, 16.0%, and 9.0%, respectively, in 4Q17.