Correlation Between ITM Power and Ballard Power
Can any of the company-specific risk be diversified away by investing in both ITM Power 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 ITM Power and Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITM Power Plc and Ballard Power Systems, you can compare the effects of market volatilities on ITM Power 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 ITM Power with a short position of Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Power and Ballard Power.
Diversification Opportunities for ITM Power and Ballard Power
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ITM and Ballard is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ITM Power Plc 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 ITM 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 ITM Power Plc 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 ITM Power i.e., ITM Power and Ballard Power go up and down completely randomly.
Pair Corralation between ITM Power and Ballard Power
Assuming the 90 days horizon ITM Power Plc is expected to under-perform the Ballard Power. But the pink sheet apears to be less risky and, when comparing its historical volatility, ITM Power Plc is 1.35 times less risky than Ballard Power. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Ballard Power Systems is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 173.00 in Ballard Power Systems on September 3, 2024 and sell it today you would lose (24.00) from holding Ballard Power Systems or give up 13.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITM Power Plc vs. Ballard Power Systems
Performance |
| Timeline |
| ITM Power Plc |
| Ballard Power Systems |
ITM Power and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Power and Ballard Power
The main advantage of trading using opposite ITM Power and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Power 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.| ITM Power vs. Dear Cashmere Holding | ITM Power vs. Goff Corp | ITM Power vs. Wialan Technologies | ITM Power vs. Cgrowth Capital |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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