Correlation Between Regional Management and B Riley
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and B Riley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and B Riley Financial, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of B Riley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and B Riley.
Diversification Opportunities for Regional Management and B Riley
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and RILYK is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp 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 Regional Management 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 Regional Management Corp 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 Regional Management i.e., Regional Management and B Riley go up and down completely randomly.
Pair Corralation between Regional Management and B Riley
Allowing for the 90-day total investment horizon Regional Management Corp is expected to under-perform the B Riley. But the stock apears to be less risky and, when comparing its historical volatility, Regional Management Corp is 1.24 times less risky than B Riley. The stock trades about -0.03 of its potential returns per unit of risk. The B Riley Financial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,568 in B Riley Financial on August 29, 2024 and sell it today you would earn a total of 422.00 from holding B Riley Financial or generate 26.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. B Riley Financial
Performance |
| Timeline |
| Regional Management Corp |
| B Riley Financial |
Regional Management and B Riley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and B Riley
The main advantage of trading using opposite Regional Management and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. Visa Class A | Regional Management vs. Mastercard | Regional Management vs. Discover Financial Services |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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