Correlation Between Sprott Nickel and BrandywineGLOBAL

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

By analyzing existing cross correlation between Sprott Nickel Miners and BrandywineGLOBAL Dynamic, you can compare the effects of market volatilities on Sprott Nickel and BrandywineGLOBAL 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 Nickel with a short position of BrandywineGLOBAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Nickel and BrandywineGLOBAL.

Diversification Opportunities for Sprott Nickel and BrandywineGLOBAL

0.5

Correlation Coefficient

Sprott Nickel  BrandywineGLOBAL

Very weak diversification

The 3 months correlation between Sprott and BrandywineGLOBAL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and BrandywineGLOBAL Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrandywineGLOBAL D and Sprott Nickel 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 Nickel Miners are associated (or correlated) with BrandywineGLOBAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrandywineGLOBAL D has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and BrandywineGLOBAL go up and down completely randomly.

Pair Corralation between Sprott Nickel and BrandywineGLOBAL

Given the investment horizon of 90 days Sprott Nickel Miners is expected to under-perform the BrandywineGLOBAL. In addition to that, Sprott Nickel is 1.96 times more volatile than BrandywineGLOBAL Dynamic. It trades about -0.2 of its total potential returns per unit of risk. BrandywineGLOBAL Dynamic is currently generating about -0.11 per unit of volatility. If you would invest  1,449  in BrandywineGLOBAL Dynamic on December 3, 2024 and sell it today you would lose (76.00) from holding BrandywineGLOBAL Dynamic or give up 5.24% of portfolio value over 90 days.

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

Sprott Nickel Miners  vs.  BrandywineGLOBAL Dynamic

Sprott Nickel Miners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Nickel Miners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

BrandywineGLOBAL D

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrandywineGLOBAL Dynamic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, BrandywineGLOBAL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sprott Nickel and BrandywineGLOBAL

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

The idea behind Sprott Nickel Miners and BrandywineGLOBAL Dynamic 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.