In this part, we’ll analyze the correlation between Patterson-UTI Energy’s (PTEN) stock price and WTI (West Texas Intermediate) crude oil’s price. The correlation coefficient between Patterson-UTI Energy’s (PTEN) and the price of crude oil 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.
PTEN’s correlation with crude oil
The correlation coefficient between Patterson-UTI Energy’s stock price and crude oil prices from March 2016 to March 20, 2017, is 0.64. This indicates a relatively strong positive relationship between crude oil prices and Patterson-UTI Energy’s stock.
Correlation between PTEN’s peers and crude oil
As the table above shows, the VanEck Vectors Oil Services ETF (OIH), a fund that tracks an index of 25 OFS companies, has a correlation of 0.71 with crude oil since March 2016. By comparison, Nabors Industries’ (NBR) correlation coefficient during the same period is 0.61, while Flotek Industries’ (FTK) correlation coefficient since March 2016 is 0.43. Tidewater’s (TDW) correlation coefficient during that time is 0.34.
In the next and final part, we’ll discuss the Wall Street analysts’ recommendations for Patterson-UTI Energy and its peers.