Correlation Between Bank of America and Ballard Power
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 Bank of America and Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Ballard Power Systems, you can compare the effects of market volatilities on Bank of America 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 Bank of America with a short position of Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Ballard Power.
Diversification Opportunities for Bank of America and Ballard Power
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Ballard is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America 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 Bank of America 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 Bank of America 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 Bank of America i.e., Bank of America and Ballard Power go up and down completely randomly.
Pair Corralation between Bank of America and Ballard Power
Considering the 90-day investment horizon Bank of America is expected to generate 0.37 times more return on investment than Ballard Power. However, Bank of America is 2.67 times less risky than Ballard Power. It trades about 0.27 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.11 per unit of risk. If you would invest 4,262 in Bank of America on August 29, 2024 and sell it today you would earn a total of 513.00 from holding Bank of America or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Ballard Power Systems
Performance |
| Timeline |
| Bank of America |
| Ballard Power Systems |
Bank of America and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Ballard Power
The main advantage of trading using opposite Bank of America and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Ballard Power vs. Superior Plus Corp | Ballard Power vs. NMI Holdings | Ballard Power vs. Origin Agritech | Ballard Power vs. SIVERS SEMICONDUCTORS AB |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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