Correlation Between Sun Life and Brookfield Renewable

Can any of the company-specific risk be diversified away by investing in both Sun Life 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 Sun Life and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Life Financial and Brookfield Renewable Partners, you can compare the effects of market volatilities on Sun Life 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 Sun Life with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Brookfield Renewable.

Diversification Opportunities for Sun Life and Brookfield Renewable

0.54

Correlation Coefficient

Sun Life  Brookfield Renewable

Very weak diversification

The 3 months correlation between Sun and Brookfield is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Sun Life 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 Sun Life Financial 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 Sun Life i.e., Sun Life and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Sun Life and Brookfield Renewable

Assuming the 90 days trading horizon Sun Life Financial is expected to under-perform the Brookfield Renewable. But the preferred stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.96 times less risky than Brookfield Renewable. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Brookfield Renewable Partners is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,531  in Brookfield Renewable Partners on April 9, 2025 and sell it today you would earn a total of  92.00  from holding Brookfield Renewable Partners or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sun Life Financial  vs.  Brookfield Renewable Partners

Sun Life Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, 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 weak basic indicators, Brookfield Renewable sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Brookfield Renewable

The main advantage of trading using opposite Sun Life and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life 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 Sun Life Financial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.