Correlation Between Ballard Power and Boralex

Can any of the company-specific risk be diversified away by investing in both Ballard Power and Boralex 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 Boralex 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 Boralex, you can compare the effects of market volatilities on Ballard Power and Boralex 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 Boralex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Boralex.

Diversification Opportunities for Ballard Power and Boralex

0.48

Correlation Coefficient

Ballard Power  Boralex

Very weak diversification

The 3 months correlation between Ballard and Boralex is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex 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 Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Ballard Power i.e., Ballard Power and Boralex go up and down completely randomly.

Pair Corralation between Ballard Power and Boralex

Assuming the 90 days trading horizon Ballard Power Systems is expected to generate 3.09 times more return on investment than Boralex. However, Ballard Power is 3.09 times more volatile than Boralex. It trades about 0.03 of its potential returns per unit of risk. Boralex is currently generating about -0.18 per unit of risk. If you would invest  226.00  in Ballard Power Systems on September 14, 2024 and sell it today you would earn a total of  3.00  from holding Ballard Power Systems or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Ballard Power Systems  vs.  Boralex

Ballard Power Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ballard Power Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Ballard Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boralex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boralex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ballard Power and Boralex

The main advantage of trading using opposite Ballard Power and Boralex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, Boralex 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 Boralex will offset losses from the drop in Boralex's long position.

The idea behind Ballard Power Systems and Boralex pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.