In this part, we’ll analyze the correlation between Baker Hughes’s (BHI) stock price and West Texas Intermediate (or WTI) crude oil’s price. The correlation coefficient between BHI’s and crude oil’s price measures the statistical relationship between the two variables.
A correlation coefficient value of 0 to 1 shows a positive correlation, 0 states no correlation, and -1 to 0 shows an inverse correlation.
Correlation between Baker Hughes’s and crude oil prices
The correlation coefficient between Baker Hughes’s stock price and crude oil prices from July 2015 to the present is 0.59. This indicates a relatively strong positive relationship between crude oil prices and Baker Hughes’s stock.
Correlation between BHI’s stock and crude oil
As noted in the table above, BHI’s correlation with crude oil prices has decreased since the end of 1Q16 through July 7, 2016, compared to the past year. The VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has increased since April 1 versus the correlation coefficient since July 2015.
In the final part of this series, we’ll discuss Wall Street analysts’ recommendations for BHI.