Correlation Between NYSE Composite and Ballard Power

Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Ballard Power 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 NYSE Composite and Ballard Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NYSE Composite and Ballard Power Systems, you can compare the effects of market volatilities on NYSE Composite and Ballard Power 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 NYSE Composite with a short position of Ballard Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ballard Power.

Diversification Opportunities for NYSE Composite and Ballard Power

0.69

Correlation Coefficient

NYSE Composite  Ballard Power

Poor diversification

The 3 months correlation between NYSE and Ballard is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems and NYSE Composite 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 NYSE Composite are associated (or correlated) with Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ballard Power go up and down completely randomly.

Pair Corralation between NYSE Composite and Ballard Power

Assuming the 90 days trading horizon NYSE Composite is expected to generate 8.73 times less return on investment than Ballard Power. But when comparing it to its historical volatility, NYSE Composite is 7.19 times less risky than Ballard Power. It trades about 0.14 of its potential returns per unit of risk. Ballard Power Systems is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Ballard Power Systems on May 6, 2025 and sell it today you would earn a total of  65.00  from holding Ballard Power Systems or generate 53.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

NYSE Composite  vs.  Ballard Power Systems

Pair Trading with NYSE Composite and Ballard Power

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

The idea behind NYSE Composite and Ballard Power Systems 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 Commodity Directory module to find actively traded commodities issued by global exchanges.