Has SLB’s Correlation with Crude Oil Fallen since 1Q16?


Jul. 8 2016, Updated 3:06 p.m. ET

Correlation coefficient

In this part, we’ll analyze the correlation between Schlumberger’s (SLB) stock price and the West Texas Intermediate (or WTI) crude oil price. The correlation coefficient between SLB and the crude oil price measures the statistical relationship between the two variables. A correlation coefficient value of zero to one shows a positive correlation. Zero states no correlation, and -1 to zero shows an inverse correlation.

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What’s the correlation between Schlumberger and crude oil?

The correlation coefficient between Schlumberger’s stock price and crude oil prices from June 2015 to the present is 0.63. This indicates a relatively strong positive relationship between crude oil prices and Schlumberger stock.

Correlation between SLB’s stock and crude oil

As noted in the table above, SLB’s correlation with crude oil has fallen since the end of 1Q16 until July 1 compared to the past year. The VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has also decreased since April 1 versus the correlation coefficient since July 2015. Helmerich & Payne’s (HP) correlation coefficient since April 1 is higher than SLB’s. SLB makes up 1.2% of the iShares S&P 500 Value ETF (IVE).

Next, we’ll discuss Wall Street analysts’ recommendations for SLB.


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