Correlation Between Ballard Power and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Ballard Power and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort SP500, you can compare the effects of market volatilities on Ballard Power and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and ProShares UltraShort.
Diversification Opportunities for Ballard Power and ProShares UltraShort
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ballard and ProShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Ballard Power i.e., Ballard Power and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Ballard Power and ProShares UltraShort
Given the investment horizon of 90 days Ballard Power Systems is expected to under-perform the ProShares UltraShort. In addition to that, Ballard Power is 2.87 times more volatile than ProShares UltraShort SP500. It trades about -0.03 of its total potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about -0.05 per unit of volatility. If you would invest 2,883 in ProShares UltraShort SP500 on January 19, 2024 and sell it today you would lose (156.00) from holding ProShares UltraShort SP500 or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ballard Power Systems vs. ProShares UltraShort SP500
Performance |
| Timeline |
| Ballard Power Systems |
| ProShares UltraShort |
Ballard Power and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ballard Power and ProShares UltraShort
The main advantage of trading using opposite Ballard Power and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Ballard Power vs. Illinois Tool Works | Ballard Power vs. Dover | Ballard Power vs. Cummins | Ballard Power vs. Eaton PLC |
| ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. HUMANA INC | ProShares UltraShort vs. Aquagold International | ProShares UltraShort vs. Thrivent High Yield |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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