The Correlation of Mining Shares in 2017 Year-to-Date
Correlation among miners
In this article, we’ll look at the relative performance of miners in accordance with precious metals. A correlation analysis can give us a review of mining stocks’ price movements and how closely they are tied to the changes in precious metal prices.
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Among the mining funds, the VanEck Vectors Gold Miners ETF (GDX) and the Global X Silver Miners ETF (SIL) fell 2.7% and 2%, respectively, on September 11, 2017, as precious metals also experienced a down day.
Among the four miners that we are discussing, Yamana Gold has the highest correlation to gold, while Randgold has the lowest correlation. Yamana Gold has seen an upward trending correlation to gold, while the other three miners have seen a mix of upward and downward trends in correlation to gold.
A rise in correlation suggests that a price change in gold could cause mining stocks to move in the same direction. A decline in correlation suggests that mining stocks could move independently of gold.
Yamana has a three-year correlation of ~0.74 with gold and a one-year correlation of ~0.80. These indicators suggest that the stock has moved in the same direction as gold ~80% of the time in the past one-year period. These correlations can move in different directions at various times.