In this part, we’ll analyze the correlation between Baker Hughes (BHI) stock and the price of West Texas Intermediate (or WTI) crude oil. The correlation coefficient between BHI’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, 0 states no correlation, and -1 to 0 shows an inverse correlation.
How correlated are Baker Hughes stock and crude oil prices?
The correlation coefficient between Baker Hughes’s stock price and crude oil prices from December 2015 to the present is 0.56. This indicates a relatively strong positive relationship between crude oil prices and Baker Hughes stock.
Correlation between BHI’s stock price and crude oil
As noted in the chart above, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil since December 2015 is 0.72. OIH is an ETF tracking index of 25 OFS companies.
Weatherford International’s (WFT) correlation coefficient since December 2015 is 0.50. CARBO Ceramics’s (CRR) correlation with crude oil since December 2015 is 0.62, while Flotek Industries’s (FTK) correlation with crude oil since December 2015 is 0.27.
In the final part of this series, we’ll discuss Baker Hughes’s returns versus the industry indicators.