Correlation Between Labrador Iron and Ballard Power
Can any of the company-specific risk be diversified away by investing in both Labrador Iron 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 Labrador Iron and Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Ballard Power Systems, you can compare the effects of market volatilities on Labrador Iron 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 Labrador Iron with a short position of Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Ballard Power.
Diversification Opportunities for Labrador Iron and Ballard Power
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Labrador and Ballard is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore 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 Labrador Iron 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 Labrador Iron Ore 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 Labrador Iron i.e., Labrador Iron and Ballard Power go up and down completely randomly.
Pair Corralation between Labrador Iron and Ballard Power
Assuming the 90 days trading horizon Labrador Iron Ore is expected to under-perform the Ballard Power. But the stock apears to be less risky and, when comparing its historical volatility, Labrador Iron Ore is 4.4 times less risky than Ballard Power. The stock trades about -0.15 of its potential returns per unit of risk. The Ballard Power Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Ballard Power Systems on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Ballard Power Systems or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Ballard Power Systems
Performance |
| Timeline |
| Labrador Iron Ore |
| Ballard Power Systems |
Labrador Iron and Ballard Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Ballard Power
The main advantage of trading using opposite Labrador Iron and Ballard Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron 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.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
| Ballard Power vs. Labrador Iron Ore | Ballard Power vs. DIRTT Environmental Solutions | Ballard Power vs. BluMetric Environmental | Ballard Power vs. Gatos Silver |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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