In this part, we’ll analyze the correlation between Halliburton’s (HAL) stock price and West Texas Intermediate (or WTI) crude oil prices. The correlation coefficient between HAL and crude oil prices 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.
Correlation between HAL’s stock and crude oil
The correlation coefficient between Halliburton’s stock price and crude oil prices from December 2015 to December 2016 is 0.68. This indicates a relatively strong positive relationship between crude oil prices and Halliburton stock.
Correlation between peers and crude oil
As noted in the table 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. Schlumberger’s (SLB) correlation coefficient since December 2015 is 0.64, while Flotek Industries’ (FTK) correlation coefficient since December 2015 is 0.49. CARBO Ceramic’s (CRR) correlation coefficient during the same period was 0.53.
Next, we’ll discuss Halliburton’s returns versus the industry indicators.