Has Patterson-UTI Energy’s Correlation with Crude Oil Increased since Fiscal 2Q16?


Aug. 29 2016, Updated 11:04 a.m. ET

Correlation coefficient

In this part of our series, we’ll analyze the correlation between Patterson-UTI Energy’s (PTEN) stock price and the WTI (West Texas Intermediate) crude oil price. The correlation coefficient between PTEN’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, whereas 0 states no correlation, and -1 to 0 shows an inverse correlation.

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The correlation coefficient between Patterson-UTI Energy’s stock price and crude oil prices from August 2015 to the present is 0.64. This indicates a relatively strong positive relationship between crude oil prices and Patterson-UTI Energy’s stock.

As noted in the table above, PTEN’s correlation with crude oil prices has increased since the end of fiscal 2Q16, as of August 19, as compared to the past year. By comparison, theVanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has increased as of June 30, as compared to its correlation coefficient since August 2015. Notably, Nabors Industries’ (NBR) correlation coefficient since June 30 is higher than PTEN’s.

In the next part, we’ll discuss implied volatility.


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