Correlation Between Sprott Physical and Brookfield Renewable

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Brookfield Renewable at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sprott Physical and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sprott Physical Gold and Brookfield Renewable Partners, you can compare the effects of market volatilities on Sprott Physical and Brookfield Renewable and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sprott Physical with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Brookfield Renewable.

Diversification Opportunities for Sprott Physical and Brookfield Renewable

0.68

Correlation Coefficient

Sprott Physical  Brookfield Renewable

Poor diversification

The 3 months correlation between Sprott and Brookfield is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Sprott Physical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sprott Physical Gold are associated (or correlated) with Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable has no effect on the direction of Sprott Physical i.e., Sprott Physical and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Sprott Physical and Brookfield Renewable

Assuming the 90 days trading horizon Sprott Physical is expected to generate 3.6 times less return on investment than Brookfield Renewable. But when comparing it to its historical volatility, Sprott Physical Gold is 1.69 times less risky than Brookfield Renewable. It trades about 0.08 of its potential returns per unit of risk. Brookfield Renewable Partners is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,061  in Brookfield Renewable Partners on April 24, 2025 and sell it today you would earn a total of  659.00  from holding Brookfield Renewable Partners or generate 21.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sprott Physical Gold  vs.  Brookfield Renewable Partners

Sprott Physical Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Brookfield Renewable

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Partners are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Brookfield Renewable sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Brookfield Renewable

The main advantage of trading using opposite Sprott Physical and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Brookfield Renewable can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brookfield Renewable will offset losses from the drop in Brookfield Renewable's long position.

The idea behind Sprott Physical Gold and Brookfield Renewable Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.