Correlation Between Ballard Power and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Ballard Power and Nel ASA 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 Ballard Power and Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ballard Power Systems and Nel ASA, you can compare the effects of market volatilities on Ballard Power and Nel ASA 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 Ballard Power with a short position of Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Nel ASA.
Diversification Opportunities for Ballard Power and Nel ASA
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ballard and Nel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA and Ballard Power 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 Ballard Power Systems are associated (or correlated) with Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Ballard Power i.e., Ballard Power and Nel ASA go up and down completely randomly.
Pair Corralation between Ballard Power and Nel ASA
Given the investment horizon of 90 days Ballard Power Systems is expected to generate 1.23 times more return on investment than Nel ASA. However, Ballard Power is 1.23 times more volatile than Nel ASA. It trades about -0.02 of its potential returns per unit of risk. Nel ASA is currently generating about -0.3 per unit of risk. If you would invest 158.00 in Ballard Power Systems on September 1, 2024 and sell it today you would lose (9.00) from holding Ballard Power Systems or give up 5.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ballard Power Systems vs. Nel ASA
Performance |
| Timeline |
| Ballard Power Systems |
| Nel ASA |
Ballard Power and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ballard Power and Nel ASA
The main advantage of trading using opposite Ballard Power and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Ballard Power vs. Emerson Electric | Ballard Power vs. Eaton PLC | Ballard Power vs. Parker Hannifin | Ballard Power vs. Illinois Tool Works |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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