A Brief Correlation Analysis of a Few Select Miners


Nov. 29 2017, Updated 12:00 p.m. ET

Correlation analysis

Gold is the most favorite among precious metals. The other metals are known to follow the trend of gold. Miners also follow gold for their directional price movements.

Below, we’ll assess B2Gold (BTG), Royal Gold (RGLD), Coeur Mining (CDE), and Barrick Gold (ABX) and their correlations to gold.

Among the mining funds that also have a strong correlation with gold are the SPDR S&P Metals and Mining ETF (XME) and the SPDR Gold Shares (GLD). These two funds have risen 3.4% and 1.6%, respectively, on a five-day trailing basis.

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Trend reading

If we look at the one-year correlation of the above four miners, Royal Gold has the highest correlation to gold, while Barrick Gold has the lowest.

Barrick Gold has seen a declining trend in its correlation to gold over the past three years, while the other three miners witnessed a mixed trend in correlation. The correlation reading has moved up and down during the past three years.

An increase in correlation is an indicator that price changes in gold should play a role in mining stocks.

Barrick Gold’s correlation has fallen from a 0.56 three-year correlation to a one-year correlation of 0.52. A correlation of 0.52 indicates that during the past year, Barrick has followed the same price trend in gold about 52% of the time.


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