Has HP’s Correlation with Crude Oil Decreased since Fiscal 3Q16?

Alex Chamberlin - Author

Nov. 8 2016, Updated 10:04 a.m. ET

Correlation coefficient

In this part, we’ll analyze the correlation between Helmerich & Payne’s (HP) stock price and West Texas Intermediate (or WTI) crude oil’s price. The correlation coefficient between HP’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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How correlated are Helmerich & Payne’s and crude oil prices?

The correlation coefficient between Helmerich & Payne’s stock price and crude oil prices from November 2015 to the present is 0.67. This indicates a relatively strong positive relationship between crude oil prices and Helmerich & Payne’s stock.

Correlation between HP’s stock and crude oil

As noted in the table above, Helmerich & Payne’s (HP) correlation with crude oil price has decreased since the end of fiscal 3Q16 until November 2 compared to the past year. The VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil has increased since July 1 versus the correlation coefficient since November 2015. Patterson-UTI Energy’s (PTEN) correlation coefficient since July 1 is higher than HP’s correlation coefficient.

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


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