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

-0.06

Correlation Coefficient

Intact Financial  Ballard Power

Good diversification

The 3 months correlation between Intact and Ballard is -0.06. 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 Corp is expected to generate 0.12 times more return on investment than Ballard Power. However, Intact Financial Corp is 8.41 times less risky than Ballard Power. It trades about -0.03 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.12 per unit of risk. If you would invest  2,402  in Intact Financial Corp on December 29, 2024 and sell it today you would lose (26.00) from holding Intact Financial Corp or give up 1.08% of portfolio value over 90 days.

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

Intact Financial Corp  vs.  Ballard Power Systems

Intact Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intact Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ballard Power Systems

Risk-Adjusted Performance

Very Weak

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

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.

The idea behind Intact Financial Corp and Ballard Power Systems 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.