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



Correlation coefficient

In this part, we’ll analyze the correlation between Patterson-UTI Energy’s (PTEN) stock price and West Texas Intermediate (or WTI) crude oil price. The correlation coefficient between PTEN’s price 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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Correlation coefficient

The correlation coefficient between Patterson-UTI Energy’s stock price and crude oil prices from July 2015 to July 8, 2016, is 0.63. This indicates a relatively strong positive relationship between crude oil prices and Patterson-UTI Energy’s stock.

Correlation between PTEN’s stock and crude oil

As noted in the table above, PTEN’s correlation with crude oil price has increased marginally since the end of 1Q16 through July 8, 2016, compared to the previous year. The VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has decreased since April 1 versus its correlation coefficient since July 2015.

Precision Drilling Corporation’s (PDS) correlation coefficient since April 1 is higher than PTEN’s. PTEN comprises only 0.57% of the WisdomTree SmallCap Dividend ETF (DES).

In the final part of this series, we’ll discuss Wall Street analysts’ recommendations for PTEN.


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