Correlation Between Ballard Power and Hillenbrand

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

Diversification Opportunities for Ballard Power and Hillenbrand

-0.63

Correlation Coefficient

Ballard Power  Hillenbrand

Excellent diversification

The 3 months correlation between Ballard and Hillenbrand is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Hillenbrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillenbrand 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 Hillenbrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillenbrand has no effect on the direction of Ballard Power i.e., Ballard Power and Hillenbrand go up and down completely randomly.

Pair Corralation between Ballard Power and Hillenbrand

Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the Hillenbrand. In addition to that, Ballard Power is 1.42 times more volatile than Hillenbrand. It trades about -0.03 of its total potential returns per unit of risk. Hillenbrand is currently generating about 0.06 per unit of volatility. If you would invest  3,091  in Hillenbrand on September 3, 2024 and sell it today you would earn a total of  312.00  from holding Hillenbrand or generate 10.09% return on investment over 90 days.

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

Ballard Power Systems  vs.  Hillenbrand

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 latest weak 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.

Hillenbrand

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hillenbrand are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Hillenbrand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ballard Power and Hillenbrand

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

The idea behind Ballard Power Systems and Hillenbrand 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.