In this part, we’ll analyze the correlation between Halliburton’s (HAL) stock price and the West Texas Intermediate (or WTI) crude oil price. 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 March 2016 to March 2017 is 0.66. This figure indicates a relatively strong positive relationship between crude oil prices and Halliburton’s stock.
Correlation between peer stocks and crude oil
As noted in the table above, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil since March 2016 is 0.70. OIH is an ETF tracking an index of 25 OFS companies. Patterson-UTI Energy’s (PTEN) correlation coefficient since March 2016 is 0.63, while McDermott International’s (MDR) correlation coefficient since March 2016 is 0.56. Baker Hughes’s (BHI) correlation coefficient during the same period is also 0.56.
Next, we’ll discuss Wall Street analysts’ recommendations for Halliburton.