Correlation Between B Riley and Ready Capital
Can any of the company-specific risk be diversified away by investing in both B Riley and Ready 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 Ready 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 Ready Capital, you can compare the effects of market volatilities on B Riley and Ready 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 Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Riley and Ready Capital.
Diversification Opportunities for B Riley and Ready Capital
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RILYO and Ready is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready 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 Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of B Riley i.e., B Riley and Ready Capital go up and down completely randomly.
Pair Corralation between B Riley and Ready Capital
Assuming the 90 days horizon B Riley Financial is expected to generate 3.71 times more return on investment than Ready Capital. However, B Riley is 3.71 times more volatile than Ready Capital. It trades about 0.04 of its potential returns per unit of risk. Ready Capital is currently generating about 0.04 per unit of risk. If you would invest 2,345 in B Riley Financial on August 28, 2024 and sell it today you would earn a total of 100.00 from holding B Riley Financial or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
B Riley Financial vs. Ready Capital
Performance |
| Timeline |
| B Riley Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ready Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
B Riley and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B Riley and Ready Capital
The main advantage of trading using opposite B Riley and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Riley position performs unexpectedly, Ready 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 Ready Capital will offset losses from the drop in Ready 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 |
| Ready Capital vs. Ready Capital | Ready Capital vs. Eagle Point Credit | Ready Capital vs. QVC 6375 percent |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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