You say oil….I say Tullow !

It seems that oil has been bottoming around 30 for a while….could be time to look at those “oilers” again…So here a quick analysis of the relationship between the share price of Tullow Oil Plc price and the GBP Oil price

The below chart shows the cumulative percentage return both for the Tullow Oil Plc price and the GBP Oil price . Clearly the relationship has been positive over time.

plot of chunk cumulchart
The rolling 52-week correlation confirms that though time varying, has been strongly positively correlated.

plot of chunk correlchart

The below plot is a bi-density chart of the Tullow Oil Plc Share price versus the GBP Oil price. The contour lines delimit the empirical joint distribution. The blue line is the best fit derived from a locally weighted scatterplot smoothing. The dotted red lines delimit the quantiles for the Tullow Oil Plc price. Whilst depicting the direction of the relationship, this chart aims also to answer the question: Does the Tullow Oil Plc share price tend to appreciate/depreciate more depending on which level GBP Oil price is trading. The cross-hair shows where the stock trade relative to the GBP Oil price
plot of chunk bidensity2

Finally I compute a granger causality test over a rolling period of 52-week in order to investigate the possibility of a one step ahead lead / lag relationship between Tullow Oil Plc price and the GBP Oil price share price. The two below charts show the rolling P Values of the test for both the share causing the Tullow Oil Plc price and vice versa.

plot of chunk pvalues