Correlation Between B Riley and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both B Riley and Sparta Capital 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 B Riley and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B Riley Financial and Sparta Capital, you can compare the effects of market volatilities on B Riley and Sparta Capital 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 B Riley with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Riley and Sparta Capital.
Diversification Opportunities for B Riley and Sparta Capital
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RILYG and Sparta is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and B Riley 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 B Riley Financial are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of B Riley i.e., B Riley and Sparta Capital go up and down completely randomly.
Pair Corralation between B Riley and Sparta Capital
Assuming the 90 days horizon B Riley Financial is expected to generate 3.24 times more return on investment than Sparta Capital. However, B Riley is 3.24 times more volatile than Sparta Capital. It trades about 0.0 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.09 per unit of risk. If you would invest 1,768 in B Riley Financial on August 30, 2024 and sell it today you would lose (478.00) from holding B Riley Financial or give up 27.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Riley Financial vs. Sparta Capital
Performance |
| Timeline |
| B Riley Financial |
| Sparta Capital |
B Riley and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Riley and Sparta Capital
The main advantage of trading using opposite B Riley and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Riley position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| B Riley vs. B Riley Financial | B Riley vs. B Riley Financial | B Riley vs. B Riley Financial, | B Riley vs. B Riley Financial |
| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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