Correlation Between Ballard Power and Barnes

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

Diversification Opportunities for Ballard Power and Barnes

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ballard and Barnes is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Ballard Power i.e., Ballard Power and Barnes go up and down completely randomly.

Pair Corralation between Ballard Power and Barnes

Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the Barnes. In addition to that, Ballard Power is 1.64 times more volatile than Barnes Group. It trades about -0.05 of its total potential returns per unit of risk. Barnes Group is currently generating about 0.02 per unit of volatility. If you would invest  3,566  in Barnes Group on December 29, 2023 and sell it today you would earn a total of  149.00  from holding Barnes Group or generate 4.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ballard Power Systems  vs.  Barnes Group

 Performance 
       Timeline  
Ballard Power Systems 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Barnes Group 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Ballard Power and Barnes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ballard Power and Barnes

The main advantage of trading using opposite Ballard Power and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.
The idea behind Ballard Power Systems and Barnes Group 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.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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