Correlation Between Ballard Power and CIRCOR International

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

Diversification Opportunities for Ballard Power and CIRCOR International

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Ballard and CIRCOR is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and CIRCOR International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIRCOR International 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 CIRCOR International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIRCOR International has no effect on the direction of Ballard Power i.e., Ballard Power and CIRCOR International go up and down completely randomly.

Pair Corralation between Ballard Power and CIRCOR International

Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the CIRCOR International. But the stock apears to be less risky and, when comparing its historical volatility, Ballard Power Systems is 1.02 times less risky than CIRCOR International. The stock trades about -0.04 of its potential returns per unit of risk. The CIRCOR International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,965  in CIRCOR International on January 19, 2024 and sell it today you would earn a total of  3,635  from holding CIRCOR International or generate 184.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy74.75%
ValuesDaily Returns

Ballard Power Systems  vs.  CIRCOR International

 Performance 
       Timeline  
Ballard Power Systems 

Risk-Adjusted Performance

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Over the last 90 days Ballard Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
CIRCOR International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CIRCOR International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, CIRCOR International is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Ballard Power and CIRCOR International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ballard Power and CIRCOR International

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

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