Correlation Between NMI Holdings and Ballard Power
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Ballard Power 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 NMI Holdings and Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Ballard Power Systems, you can compare the effects of market volatilities on NMI Holdings and Ballard Power 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 NMI Holdings with a short position of Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Ballard Power.
Diversification Opportunities for NMI Holdings and Ballard Power
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NMI and Ballard is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems and NMI Holdings 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 NMI Holdings are associated (or correlated) with Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of NMI Holdings i.e., NMI Holdings and Ballard Power go up and down completely randomly.
Pair Corralation between NMI Holdings and Ballard Power
Assuming the 90 days horizon NMI Holdings is expected to generate 0.47 times more return on investment than Ballard Power. However, NMI Holdings is 2.15 times less risky than Ballard Power. It trades about 0.11 of its potential returns per unit of risk. Ballard Power Systems is currently generating about 0.01 per unit of risk. If you would invest 3,580 in NMI Holdings on September 1, 2024 and sell it today you would earn a total of 200.00 from holding NMI Holdings or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NMI Holdings vs. Ballard Power Systems
Performance |
| Timeline |
| NMI Holdings |
| Ballard Power Systems |
NMI Holdings and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Ballard Power
The main advantage of trading using opposite NMI Holdings and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Ballard Power 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 Ballard Power will offset losses from the drop in Ballard Power's long position.| NMI Holdings vs. KIMBALL ELECTRONICS | NMI Holdings vs. UET United Electronic | NMI Holdings vs. BYD ELECTRONIC | NMI Holdings vs. Benchmark Electronics |
| Ballard Power vs. Powercell Sweden | Ballard Power vs. Nel ASA | Ballard Power vs. ITM Power Plc | Ballard Power vs. Plug Power |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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