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