Correlation Between Sprott Physical and Brookfield Asset

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Brookfield Asset 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 Asset 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 Asset Management, you can compare the effects of market volatilities on Sprott Physical and Brookfield Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Brookfield Asset.

Diversification Opportunities for Sprott Physical and Brookfield Asset

0.22

Correlation Coefficient

Sprott Physical  Brookfield Asset

Modest diversification

The 3 months correlation between Sprott and Brookfield is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man 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 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Sprott Physical i.e., Sprott Physical and Brookfield Asset go up and down completely randomly.

Pair Corralation between Sprott Physical and Brookfield Asset

Assuming the 90 days trading horizon Sprott Physical Gold is not expected to generate positive returns. However, Sprott Physical Gold is 3.0 times less risky than Brookfield Asset. It waists most of its returns potential to compensate for thr risk taken. Brookfield Asset is generating about -0.29 per unit of risk. If you would invest  3,829  in Sprott Physical Gold on December 10, 2024 and sell it today you would lose (3.00) from holding Sprott Physical Gold or give up 0.08% of portfolio value over 90 days.

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

Sprott Physical Gold  vs.  Brookfield Asset Management

Sprott Physical Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brookfield Asset Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sprott Physical and Brookfield Asset

The main advantage of trading using opposite Sprott Physical and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Brookfield Asset 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 Asset will offset losses from the drop in Brookfield Asset's long position.

The idea behind Sprott Physical Gold and Brookfield Asset Management 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.