Correlation Between Ballard Power and Nuscale Power
Can any of the company-specific risk be diversified away by investing in both Ballard Power and Nuscale 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 Ballard Power and Nuscale Power 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 Nuscale Power Corp, you can compare the effects of market volatilities on Ballard Power and Nuscale 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 Ballard Power with a short position of Nuscale Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Nuscale Power.
Diversification Opportunities for Ballard Power and Nuscale Power
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ballard and Nuscale is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power 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 Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Ballard Power i.e., Ballard Power and Nuscale Power go up and down completely randomly.
Pair Corralation between Ballard Power and Nuscale Power
Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the Nuscale Power. But the stock apears to be less risky and, when comparing its historical volatility, Ballard Power Systems is 1.3 times less risky than Nuscale Power. The stock trades about -0.04 of its potential returns per unit of risk. The Nuscale Power Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,080 in Nuscale Power Corp on August 31, 2024 and sell it today you would earn a total of 726.00 from holding Nuscale Power Corp or generate 34.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ballard Power Systems vs. Nuscale Power Corp
Performance |
| Timeline |
| Ballard Power Systems |
| Nuscale Power Corp |
Ballard Power and Nuscale Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ballard Power and Nuscale Power
The main advantage of trading using opposite Ballard Power and Nuscale Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, Nuscale 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 Nuscale Power will offset losses from the drop in Nuscale Power's long position.| Ballard Power vs. Emerson Electric | Ballard Power vs. Eaton PLC | Ballard Power vs. Parker Hannifin | Ballard Power vs. Illinois Tool Works |
| Nuscale Power vs. Cummins | Nuscale Power vs. Chart Industries | Nuscale Power vs. GE Aerospace | Nuscale Power vs. Nel ASA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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