Correlation Between Fortress Biotech and B Riley

Can any of the company-specific risk be diversified away by investing in both Fortress Biotech 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 Fortress Biotech and B Riley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortress Biotech Pref and B Riley Financial, you can compare the effects of market volatilities on Fortress Biotech 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 Fortress Biotech with a short position of B Riley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and B Riley.

Diversification Opportunities for Fortress Biotech and B Riley

-0.25

Correlation Coefficient

Fortress Biotech  B Riley

Very good diversification

The 3 months correlation between Fortress and RILYP is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref 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 Fortress Biotech 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 Fortress Biotech Pref 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 Fortress Biotech i.e., Fortress Biotech and B Riley go up and down completely randomly.

Pair Corralation between Fortress Biotech and B Riley

Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the B Riley. But the preferred stock apears to be less risky and, when comparing its historical volatility, Fortress Biotech Pref is 1.31 times less risky than B Riley. The preferred stock trades about -0.01 of its potential returns per unit of risk. The B Riley Financial is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,781  in B Riley Financial on October 10, 2024 and sell it today you would lose (1,044) from holding B Riley Financial or give up 58.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fortress Biotech Pref  vs.  B Riley Financial

Fortress Biotech Pref

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

B Riley Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, B Riley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and B Riley

The main advantage of trading using opposite Fortress Biotech and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech 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.

The idea behind Fortress Biotech Pref and B Riley Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.