Has NBR’s Correlation with Crude Oil Decreased since 1Q16?


Jul. 21 2016, Updated 8:06 p.m. ET

Correlation coefficient

In this part, we’ll analyze the correlation between Nabors Industries’s (NBR) stock price and West Texas Intermediate (or WTI) crude oil’s price. The correlation coefficient between NBR’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.

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How correlated are Nabors Industries’s and crude oil prices?

The correlation coefficient between Nabors Industries’s (NBR) stock price and crude oil prices from July 2015 to July 16 is 0.64. This indicates a strong positive relationship between crude oil prices and Nabors Industries’s stock.

Correlation between NBR’s stock and crude oil

As noted in the table above, NBR’s correlation with crude oil price has decreased since the end of 1Q16 through July 15 compared with the past year. The VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has increased marginally since April 1 versus the correlation coefficient since July 2015.

Precision Drilling Corporation’s (PDS) correlation coefficient since April 1 is higher than NBR’s. NBR comprises 0.19% of the iShares Core Aggressive Allocation ETF (AOA).

Next, we will discuss Wall Street analysts’ recommendations for NBR.


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