Now Reading: Gold has lower equity correlation than silver in 26 years of data
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Gold has lower equity correlation than silver in 26 years of data
Gold has lower equity correlation than silver in 26 years of data
Gold has shown a lower correlation with equities than silver over the past 26 financial years, according to an HDFC Mutual Fund NFO presentation. The data, covering FY01 to FY26, shows gold…
Gold has shown a lower correlation with equities than silver over the past 26 financial years, according to an HDFC Mutual Fund NFO presentation. The data, covering FY01 to FY26, shows gold had a correlation of -0.04 with the Nifty 50 TRI, while silver's correlation stood at 0.08. Both figures are close to zero, meaning neither metal moves strongly with the stock market.
Gold delivered negative returns in only four of the 26 financial years, with its steepest fall of 10.8% in FY14. Its highest return was 63.3% in FY26. Silver was more volatile, falling in 11 of the 26 years, with a steepest decline of 23.2% in FY14, but also posted the period's highest single-year gain of 127.5% in FY26.
The Nifty 50 TRI fell in eight of the 26 financial years. In most of those years gold stayed positive, including FY09 when the index dropped 35.4% and gold gained 26.8%. Only FY01 saw both assets decline.
Indian Opinion Analysis
The near-zero correlation of both metals with equities means they can act as portfolio diversifiers, but the data also shows silver is far more volatile than gold. Silver's maximum gain was twice gold's best year, yet it also fell in nearly half the financial years studied. Investors seeking a stabilising hedge during market stress may prefer gold, while those willing to accept wider swings for higher potential returns may look at silver. The next move in global interest rates and the rupee-dollar exchange rate will influence how both metals behave in the current financial year.
The analysis is based on the HDFC Mutual Fund NFO presentation data covering FY01 to FY26. Investors should consult a SEBI-registered advisor before making any decisions.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
