Correlation Between Ballard Power and Ametek

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

Diversification Opportunities for Ballard Power and Ametek

-0.56

Correlation Coefficient

Ballard Power  Ametek

Excellent diversification

The 3 months correlation between Ballard and Ametek is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc 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 Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Ballard Power i.e., Ballard Power and Ametek go up and down completely randomly.

Pair Corralation between Ballard Power and Ametek

Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the Ametek. In addition to that, Ballard Power is 6.49 times more volatile than Ametek Inc. It trades about -0.02 of its total potential returns per unit of risk. Ametek Inc is currently generating about -0.12 per unit of volatility. If you would invest  18,167  in Ametek Inc on January 26, 2024 and sell it today you would lose (345.00) from holding Ametek Inc or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ballard Power Systems  vs.  Ametek Inc

Ballard Power Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ballard Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ametek Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Ballard Power and Ametek

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

The idea behind Ballard Power Systems and Ametek Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.