Correlation between Schlumberger and crude oil
Schlumberger’s (SLB) correlation with crude oil prices from October 20, 2017, to October 27, 2017, was 0.58. During the same period, Schlumberger’s correlation with the Dow Jones Industrial Average (DJIA-INDEX) was 0.75.
What does Schlumberger’s correlation with crude oil imply?
The WTI (West Texas Intermediate) crude oil price has risen 17% since June 30, 2017. It followed the considerable fall in crude oil prices compared to the previous four months. Analysts don’t expect a significant impending downside in crude oil prices. A positive correlation can help maintain any potential rise in Schlumberger’s stock price. Schlumberger’s correlation with crude oil prices has increased sharply in the trailing year to October 27, 2017—compared to the previous year to October 27, 2016.
Schlumberger’s positive correlation with the Dow Jones Index could mean that it’s benefiting from the record high broader equity markets.
Correlation between oilfield services companies and crude oil
Since October 20, the correlation coefficient between the VanEck Vectors Oil Services ETF (OIH) and crude oil has been 0.29. OIH’s correlation with crude oil has increased in the trailing year to October 27, 2017—compared to the previous year. Since October 27, Oil States International’s (OIS) correlation with crude oil has been 0.11. Since October 20, CARBO Ceramics’ (CRR) correlation coefficient has been 0.22, while Halliburton’s (HAL) correlation coefficient was 0.49.
A high correlation means that the stock was impacted more by crude oil’s movement. A negative correlation likely indicates that the stock was impacted more by crude oil movement but in the reverse track.
Read The Oilfield Equipment and Services Industry: A Primer to learn about the OFS industry.