I like to mount ballasts to the back side or top of the canopy where they're out of sight and in open air to stay cool. Also like to put a small stack of washers on the screws and underneath the ballast so as to create space under the ballast for air flow and cooling.

By covering the wires do you mean where the wires are running to the lights? If so, no they don't need to be covered as long as the coating is in tact and not cracked or whatever.