What Are Large Oilfield Companies’ Correlations with Crude Oil?


Nov. 20 2020, Updated 4:39 p.m. ET

Schlumberger’s correlation with crude oil

In this part, we’ll analyze the correlation between Schlumberger (SLB), Halliburton (HAL), Baker Hughes, a GE company (BHGE), and National Oilwell Varco’s (NOV) stock prices with the West Texas Intermediate crude oil price.

The correlation coefficient between Schlumberger’s stock price and crude oil prices from January 11, 2017, to January 11, 2018, was 0.47. It indicates a strong positive relationship between Schlumberger stock and crude oil prices. The correlation coefficient between Schlumberger and the Dow Jones Industrial Average (DJIA-INDEX) was 0.25 since January 11, 2017.

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Halliburton, Baker Hughes, and National Oilwell Varco

As noted in the above graph, the VanEck Vectors Oil Services ETF’s (OIH) correlation with crude oil since January 11, 2017, has been 0.64. Halliburton’s correlation coefficient since January 11, 2017, has been 0.56, while Baker Hughes’s correlation coefficient since January 11, 2017, has been 0.43. During the same period, National Oilwell Varco’s correlation coefficient was 0.51.

Except for National Oilwell Varco, all three oilfield services companies’ correlations with crude oil prices decreased in the trailing year to January 11, 2018—compared to the trailing year to January 11, 2017.

What does crude oil’s correlation mean?

If crude oil price rises from here, it should help the stocks that have a high or rising correlation with crude oil prices. The current crude oil price dynamics show more upside factors that could outweigh any immediate downtrend. Read Are Energy Stocks Gaining from Oil’s 3-Year High? to learn more.

Next, we’ll look at the short interests for these OFS mid-cap stocks.


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