Correlation Between Small Cap and B Riley
Can any of the company-specific risk be diversified away by investing in both Small Cap and B Riley 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 Small Cap and B Riley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Premium and B Riley Financial,, you can compare the effects of market volatilities on Small Cap and B Riley 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 Small Cap with a short position of B Riley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and B Riley.
Diversification Opportunities for Small Cap and B Riley
Poor diversification
The 3 months correlation between Small and RILYM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and B Riley Financial, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Riley Financial, and Small Cap 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 Small Cap Premium are associated (or correlated) with B Riley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Riley Financial, has no effect on the direction of Small Cap i.e., Small Cap and B Riley go up and down completely randomly.
Pair Corralation between Small Cap and B Riley
Considering the 90-day investment horizon Small Cap is expected to generate 4.54 times less return on investment than B Riley. But when comparing it to its historical volatility, Small Cap Premium is 13.07 times less risky than B Riley. It trades about 0.08 of its potential returns per unit of risk. B Riley Financial, is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,339 in B Riley Financial, on August 28, 2024 and sell it today you would earn a total of 26.00 from holding B Riley Financial, or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Premium vs. B Riley Financial,
Performance |
| Timeline |
| Small Cap Premium |
| B Riley Financial, |
Small Cap and B Riley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and B Riley
The main advantage of trading using opposite Small Cap and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, B Riley 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 B Riley will offset losses from the drop in B Riley's long position.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
| B Riley vs. B Riley Financial | B Riley vs. B Riley Financial | B Riley vs. B Riley Financial | B Riley vs. B Riley Financial |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |