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National Oilwell Varco’s Correlation with Crude Oil Prices

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Correlation with crude oil prices

National Oilwell Varco’s (NOV) correlation with crude oil prices from September 8, 2016, to September 8, 2017, is 0.58. It indicates a relatively strong positive relationship between crude oil prices and National Oilwell Varco stock. National Oilwell Varco’s correlation with crude oil prices is higher in the trailing year to July 2017—compared to September 2016 and September 2015.

In the trailing year to September 8, 2017, National Oilwell Varco’s stock price fell 4%, which underperformed the 3.5% rise in crude oil prices during the same period.

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National Oilwell Varco’s peers and crude oil

As noted in the above graph, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil since September 8, 2016, is 0.71. McDermott International’s (MDR) correlation coefficient since September 8, 2016, is 0.48. Oil States International’s (OIS) correlation coefficient since September 8, 2016, is 0.54. During the same period, Patterson-UTI Energy’s (PTEN) correlation coefficient with crude oil prices is 0.65.

Has the correlation changed?

As noted in the above graph, National Oilwell Varco’s correlation with crude oil prices increased in the trailing year to September 8, 2017—compared to the previous year to September 8, 2016. Crude oil prices are 3.5% higher compared to a year ago. However, there are many factors weighing on the upside potential to crude oil prices. To learn more, read Crude Oil and Natural Gas Diverge: The Impact on Energy Stocks. So, a strong correlation doesn’t bode well for National Oilwell Varco’s stock price. OIH’s correlation with crude oil is marginally higher in the trailing year to September 8, 2017—compared to the previous two years.

In the next part, we’ll discuss Wall Street analysts’ recommendations for National Oilwell Varco.

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