Correlation Between Oil and Gold Silver Using Regression Analysis

Introduction Multi Commodity Exchange of India (MCX) is a demutualised commodity exchange with permanent recognition from the Government of India to facilitate online trading, clearing and settlement operations for commodity futures markets across the country. Since its inception millions of small and medium enterprises, corporate houses, exporters, importers and traders have benefitted from this nationwide electronic trading platform through its efficient and transparent price discovery and price risk management. MCX ranks No. 1 in silver, No. 2 in gold, and No. in crude oil. This document contains the correlation between change in prices of Gold, Silver and OIL with respect to each other. Over the last 50 years or so, gold and oil have generally moved together in terms of price, with a positive price correlation. The price of oil is poised to rise steadily as the supply/demand imbalance increases and the dollar declines, even if there are no supply disruptions, terrorist threats or geopolitical concerns to consider. As this happens, the price of precious metals will climb until they eventually catch up to their historic ratios.

The oil prices definitely determine the costs of a country’s economy. However, the degree of the effects may vary among different industries. High oil prices may dampen a country’s economy activities and stock market as a whole. The same theory applies to gold, silver prices too. Nevertheless, there should be some industries which benefit from high oil and gold, silver prices. Commodities Commodities for which analysis have been done using statistical methods as follows: Gold Silver Oil Main Data: Source: http://www. mcxindia. com/sitepages/realtimedata. aspx Month-YearCrude Oil (Rs.

In Lakhs)/LotsSilver(Rs in Lakhs)/LotsGold (Rs in Lakhs)/Lots Feb-2005 57630. 65 1311280. 45554577. 04 Mar-2005 132362. 24 1492926 692900. 02 Apr-2005 275824. 58 1391875. 57513792. 54 May-2005 403515. 63 1361542. 78696960. 07 Jun-2005 1025834. 1 1530791. 54848613. 35 Jul-2005 1955893. 08 1083342. 58994230. 52 Aug-2005 2740941. 84 1270751. 68953765. 9 Sep-2005 2688590. 89 1807579. 752414181. 78 Oct-2005 2010215. 72 2422228. 53 2199385. 07 Nov-2005 1450380. 75 2368303. 42608423. 58 Dec-2005 1029696. 14 3223181. 114894473. 86 Jan-2006 948291. 3 3494238. 836556802. 61 Feb-2006 1194250. 92 1938536. 585758718. 57 Mar-2006 1330380. 32 3896481. 397748336. 7 Apr-2006 738551. 33 7207205. 987475297. 91 May-2006 651179. 87 6071277. 8910150417. 59 Jun-2006 424607. 95 4258583. 657717549. 93 Jul-2006 614862. 02 3598952. 0810028712. 99 Aug-2006 836074. 24 4779742. 738074195. 27 Sep-2006 1275558 . 91 4868747. 288681169. 95 Oct-2006 1679149. 03 4294365. 097805387. 14 Nov-2006 1699163. 27 4379644. 67008183. 53 Dec-2006 1640493. 16 4676568. 524840012. 05 Jan-2007 2529211. 67 5585620. 845645149. 58 Feb-2007 2730830. 15 5529072. 426308839. 1 Mar-2007 3325369. 62 5944265. 017022558. 62 Apr-2007 2538789. 714388504. 494408963. 36 May-2007 2444850. 233873709. 885381761. 44 Jun-2007 2791854. 094038947. 144719385. 77 Jul-2007 3512484. 883539597. 94829088. 89 Aug-2007 4071387. 434387989. 954229747. 79 Sep-2007 3176323. 044222007. 295810271. 62 Oct-2007 4684780. 595239697. 558285033. 18 Nov-2007 5154108. 346628808. 9310386144. 1 Dec-2007 5153276. 594046305. 1 7759148. 93 Jan-2008 4671822. 027085404. 2216669925. 31 Feb-2008 4468044. 927292145. 0314260015. 15 Mar-2008 5275426. 229216822. 6713868565. 59 Apr-2008 5446577. 386453967. 3210250063. 6 May-2008 9230304 5560380. 310579252. 85 Jun-2008 11287930. 816558813. 8613113103. 07 Jul-2008 10822279. 058494148. 2320076066. 06 Aug-2008 7502891. 617401530. 0516215325. 61 Sep-2008 8953858. 658931120. 1421524528. 53 Oct-2008 6138823. 076926098. 7316871983. 04 Nov-2008 5377674. 754959711. 6713718417. 16 Dec-2008 6771616. 165100578. 9916907140. 81 Jan-2009 7938402. 136776131. 21051503. 32 Feb-2009 6849426. 387803863. 2123338041. 32 Mar-2009 10782770. 577749670. 7627457088. 19 Apr-2009 9238346. 155494679. 2415955495. 1 May-2009 9712546. 9 6631683. 5514787281. 64 Jun-2009 11477869. 19469903. 4613883118. 96 Jul-2009 12887544. 025741728. 9111108629. 67 Aug-2009 11608057. 387520559. 459010227. 1 Sep-2009 9671127. 2811028454. 0714016511. 44 Oct-2009 10851078. 810479374. 6613916734. 13 Nov-2009 10802349. 0112602072. 3619219496. 25 Dec-2009 9201447. 3611794199. 624053481. 19 Jan-2010 7473491. 3910482991. 4317801540. 04 Feb-2010 9057913. 3 11954575. 3419349438. 54 Mar-2010 9922781. 0610970500. 7619118760. 08 Apr-2010 10553054. 429914325. 4 16279630. 38 May-2010 12420880. 7212532951. 824456913. 5 Jun-2010 12771847. 3713589497. 7726575953. 6 Jul-2010 15920474. 9712518705. 4524563715. 66 Aug-2010 16887973. 813991490. 8419092471. 64 Sep-2010 16708048. 7614978165. 8820256126. 44 Oct-2010 8436735. 5413124421. 0112299375. 15 Mean, Median and STDDEV: Silver Gold Oil Mean5739683. 036395410. 7511241276. 8 Median4684780. 595585620. 8410150417. 6 Stddev4557905. 363595434. 417291780. 66 Correlation: Y-variable X-variable (Rs. In Lakhs)Univariate Stat FilterCrude Oil (Rs. In Lakhs)Gold (Rs in Lakhs)Silver(Rs in Lakhs) Crude OilMean5739683Correlation1. 0000. 79290. 8307 Crude OilMedian4684781p-value 0. 00000. 0000 Crude OilMinimum57630. 65Rank-Corr1. 00000. 78860. 8094 Crude OilMaximum16887974p[rank-corr] 0. 00000. 0000 Crude OilN69N696969 Crude OilP[Sign-Rank]0. 0000intercept 3960417. 96512634201. 4935 Crude Oil  Slope 1. 26850. 6553 Gold Mean11241277Correlation0. 79291. 00000. 8355 Gold Median10150418p-value0. 0000 0. 0000 Gold Minimum513792. 5Rank-Corr0. 78861. 00000. 8788 Gold Maximum27457088p[rank-corr]0. 0000 0. 0000 Gold N69N696969 Gold P[Sign-Rank]0. 0000intercept168162. 2032 1764630. 6611 Gold   Slope0. 4956 0. 4119

SilverMean6395411Correlation0. 83070. 83551. 0000 SilverMedian5585621p-value0. 00000. 0000 SilverMinimum1083343Rank-Corr0. 80940. 87881. 0000 SilverMaximum14978166p[rank-corr]0. 00000. 0000 SilverN69N696969 SilverP[Sign-Rank]0. 0000intercept-995290. 5246405216. 6160 Silver  Slope1. 05311. 6943 Conclusion:- There is a definite correlation established between the crude oil prices and gold where a ratio of 0. 7929/1 exists between the gold and oil prices which is a clear indicator that that without considering any other factors a 79 % increase in gold prices occurs with a 100 % increase in Oil Prices.

There is also a definite correlation established between the crude oil prices and silver where a ratio of 0. 8307/1 exists which is a clear indicator that that without considering any other factors a 83 % increase in silver prices occurs with a 100 % increase in Oil Prices. One can also observe that an 83 % increase in gold prices also relates to a similar increase in silver prices and vice-versa which indicates that gold and silver behave like substitute products p value