What’s the Directional Trend in Key Miners’ Correlation?
AngloGold Ashanti has had the lowest correlation with gold this year, while Gold Fields has had the highest correlation with gold.
Nov. 10 2017, Updated 9:03 a.m. ET
Correlation analysis
Most of the time, mining stocks’ performances follow precious metals. However, they can deviate. Correlation analysis can give investors some perspective on how mining stocks relate to gold and silver. In this part, we’ll compare Sibanye Gold (SBGL), Gold Fields (GFI), Barrick Gold (ABX), and AngloGold Ashanti (AU).
Mining funds like the Sprott Gold Miners (SGDM) and the Global X Silver Miners ETF (SIL) also track precious metals. They fell 0.15% and 1.4%, respectively, on a 30-day trailing basis.
Correlation trends
Among the four miners we’re examining, AngloGold Ashanti has had the lowest correlation with gold this year, while Gold Fields has had the highest correlation with gold.
All four mining stocks have seen their correlations with gold rise in the past three years.
Gold Fields and AngloGold’s correlation have risen in the past three years. AngloGold’s correlation rose from a three-year correlation of 0.49 to a one-year correlation of 0.66. A correlation of 0.66 suggests that AngloGold has moved in the same direction as gold ~66% of the time during the past year.
Barrick Gold has witnessed a drop in its correlation to gold during the last three years. Barrick Gold’s correlation fell from a three-year correlation of 0.56 to a one-year correlation of 0.52.
A correlation analysis is crucial because it can help us determine whether the stock may or may not be influenced by the changes in gold.