Correlation Between Intact Financial and Ballard Power
Can any of the company-specific risk be diversified away by investing in both Intact Financial 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 Intact Financial and Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intact Financial Corp and Ballard Power Systems, you can compare the effects of market volatilities on Intact Financial 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 Intact Financial with a short position of Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intact Financial and Ballard Power.
Diversification Opportunities for Intact Financial and Ballard Power
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intact and Ballard is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Intact Financial Corp 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 Intact Financial 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 Intact Financial Corp 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 Intact Financial i.e., Intact Financial and Ballard Power go up and down completely randomly.
Pair Corralation between Intact Financial and Ballard Power
Assuming the 90 days trading horizon Intact Financial is expected to generate 12.23 times less return on investment than Ballard Power. But when comparing it to its historical volatility, Intact Financial Corp is 10.12 times less risky than Ballard Power. It trades about 0.23 of its potential returns per unit of risk. Ballard Power Systems is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 187.00 in Ballard Power Systems on September 12, 2024 and sell it today you would earn a total of 55.00 from holding Ballard Power Systems or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intact Financial Corp vs. Ballard Power Systems
Performance |
| Timeline |
| Intact Financial Corp |
| Ballard Power Systems |
Intact Financial and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intact Financial and Ballard Power
The main advantage of trading using opposite Intact Financial and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intact Financial 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.| Intact Financial vs. Intact Financial Corp | Intact Financial vs. National Bank of | Intact Financial vs. Fairfax Financial Holdings | Intact Financial vs. Fairfax Financial Holdings |
| Ballard Power vs. Nicola Mining | Ballard Power vs. Atrium Mortgage Investment | Ballard Power vs. Faction Investment Group | Ballard Power vs. Arbor Metals Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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