What Are Large Oilfield Stocks’ Correlations with Crude Oil?



Correlation coefficient

In this article, we’ll analyze the correlations between West Texas Intermediate (or WTI) crude oil and the stock prices of Schlumberger (SLB), Halliburton (HAL), Baker Hughes (BHI), and National Oilwell Varco (NOV).

The correlation coefficients between these stocks and crude oil’s price measures the statistical relationship between the variables. A correlation coefficient value of 0 to 1 shows a positive correlation, 0 shows no correlation, and -1 to 0 shows an inverse correlation.

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Schlumberger’s correlation with crude oil

The correlation coefficient between Schlumberger’s stock price and crude oil’s price from May 2016 to May 2017 is 0.63, indicating a relatively strong positive relationship between the two. The correlation coefficient between Schlumberger and the Dow Jones Industrial Average (DJIA-INDEX) is 0.54.

HAL’s, BHI’s, and NOV’s correlations with crude oil

As noted in the graph above, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil since May 2016 is 0.72. OIH is an ETF tracking an index of 25 OFS (oilfield equipment and services) companies. Halliburton’s correlation coefficient from May 2016 to May 2017 is 0.67, while Baker Hughes’s is 0.53. National Oilwell Varco’s correlation coefficient for the same period is ~0.60.

Read more about crude oil’s price in Market Realist’s A key investor’s guide to the crude oil market.

In the next article, we’ll look at the short interests for these OFS midcap stocks.


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