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
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Ballard is -0.45. 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
Assuming the 90 days trading horizon Bank of America is expected to under-perform the Ballard Power. But the stock apears to be less risky and, when comparing its historical volatility, Bank of America is 3.42 times less risky than Ballard Power. The stock trades about -0.31 of its potential returns per unit of risk. The Ballard Power Systems is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Ballard Power Systems on November 27, 2024 and sell it today you would lose (6.00) from holding Ballard Power Systems or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| 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. Oncolytics Biotech | Bank of America vs. DRI Healthcare Trust | Bank of America vs. Chemtrade Logistics Income | Bank of America vs. Champion Gaming Group |
| Ballard Power vs. Canlan Ice Sports | Ballard Power vs. Westshore Terminals Investment | Ballard Power vs. Economic Investment Trust | Ballard Power vs. 2028 Investment Grade |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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