In this article, we’ll analyze the correlation between Weatherford International’s (WFT) stock price and West Texas Intermediate (or WTI) crude oil’s price.
The correlation coefficient between WFT’s and crude oil’s prices measures the statistical relationship between the two variables. A correlation coefficient value of 0 to 1 shows a positive correlation, 0 shows no correlation, and -1 to 0 shows an inverse correlation.
How related are WFT’s and crude oil’s prices?
The correlation coefficient between Weatherford International’s stock price and crude oil’s price from August 2015 to the present is 0.51. This indicates a relatively strong positive relationship between crude oil and Weatherford International.
Correlation between WFT and crude oil
As noted in the table above, Weatherford International’s correlation coefficient with crude oil has increased significantly from the end of 2Q16 until August 12, compared to the previous year.
By comparison, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has also increased since July 1, compared to their correlation a year ago. National Oilwell Varco’s (NOV) correlation coefficient with crude oil since July 1 is similar to WFT’s.
Next, we’ll discuss Weatherford International’s returns compared to the industry indicators.