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Silver Miners and Their Correlation to Silver

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Jul. 12 2016, Updated 8:06 p.m. ET

Correlation to silver

As we know, the precious metals market has skyrocketed in 2016, touching multimonth highs. However, it’s important for investors to know which mining stocks are overperforming and underperforming their peers. The short list among upstream and downstream shares can be very important. Silver miners’ stocks rose substantially due to the tremendous rise in silver.

Silver mining shares that have high correlations with silver include Silver Wheaton (SLW), Pan American Silver (PAAS), Coeur Mining (CDE), and Hecla Mining (HL). These four stocks have seen YTD (year-to-date) rises of 98.5%, 171.8%, 359.7%, and 192.1%, respectively.

These substantial returns since the beginning of 2016 are most likely due to the safe-haven bids that have lifted silver and other precious metals.

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Uptrends or downtrends

As we can see in the above chart, over the past three years, Pan American Silver, Coeur Mining, and Hecla saw upward trends in their correlations with silver. However, the YTD correlation of these three stocks has declined. The past month has seen a consistent uptrend compared to the YTD correlation. The relationship of Silver Wheaton has been unstable for the past three years.

Silver Wheaton is the most correlated to silver among the four silver stocks over the past one year. The four stocks make up 8.3% of the fluctuations in the VanEck Vectors Gold Miners ETF (GDX).

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