Correlation Between Ballard Power and Quality Industrial
Can any of the company-specific risk be diversified away by investing in both Ballard Power and Quality Industrial 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 Quality Industrial 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 Quality Industrial Corp, you can compare the effects of market volatilities on Ballard Power and Quality Industrial 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 Quality Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Quality Industrial.
Diversification Opportunities for Ballard Power and Quality Industrial
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ballard and Quality is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Quality Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Industrial Corp 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 Quality Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Industrial Corp has no effect on the direction of Ballard Power i.e., Ballard Power and Quality Industrial go up and down completely randomly.
Pair Corralation between Ballard Power and Quality Industrial
Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the Quality Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Ballard Power Systems is 2.84 times less risky than Quality Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The Quality Industrial Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5.36 in Quality Industrial Corp on September 1, 2024 and sell it today you would earn a total of 2.14 from holding Quality Industrial Corp or generate 39.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ballard Power Systems vs. Quality Industrial Corp
Performance |
| Timeline |
| Ballard Power Systems |
| Quality Industrial Corp |
Ballard Power and Quality Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ballard Power and Quality Industrial
The main advantage of trading using opposite Ballard Power and Quality Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, Quality Industrial 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 Quality Industrial will offset losses from the drop in Quality Industrial's long position.| Ballard Power vs. Emerson Electric | Ballard Power vs. Eaton PLC | Ballard Power vs. Parker Hannifin | Ballard Power vs. Illinois Tool Works |
| Quality Industrial vs. GE Aerospace | Quality Industrial vs. Eaton PLC | Quality Industrial vs. Siemens AG Class | Quality Industrial vs. Parker Hannifin |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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