Miners’ correlations with precious metals
It’s important for investors to know which stocks are closely tied to precious metals and which aren’t. Stocks with higher correlations to precious metals will likely be even more affected by the global indicators that influence precious metals themselves.
Leveraged mining funds such as the Direxion Daily Junior 3X Gold Miners (JNUG) and the ProShares Ultra Gold (AGQ) also have significant correlations with their respective precious metals. Echoing the precious metal’s rise since the start of the year, these two funds have increased 20.6% and 22.3%, respectively, as of March 24.
Among industry peers AngloGold Ashanti (AU), Hecla Mining (HL), Kinross Gold (KGC), and Eldorado Gold (EGO), AngloGold has the lowest correlation with gold, while Kinross Gold has the highest correlation with gold. Over the past three years, AngloGold has seen a downward trend in its correlation to gold. Kinross has seen its correlation to gold rise during the same timeframe. Eldorado and Hecla saw a mix of upward and downward movements.
Kinross’s correlation with gold rose from a three-year correlation of ~0.69 to a one-year correlation of ~0.75. A correlation of ~0.75 means that ~75.0% of the time, Kinross has moved in the same direction as gold over the past year.