Correlation Between Gladstone Investment and B Riley

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

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

Diversification Opportunities for Gladstone Investment and B Riley

0.48

Correlation Coefficient

Gladstone Investment  B Riley

Very weak diversification

The 3 months correlation between Gladstone and RILYT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and B Riley go up and down completely randomly.

Pair Corralation between Gladstone Investment and B Riley

Assuming the 90 days horizon Gladstone Investment is expected to generate 4.41 times less return on investment than B Riley. But when comparing it to its historical volatility, Gladstone Investment is 15.19 times less risky than B Riley. It trades about 0.04 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,019  in B Riley Financial on September 24, 2024 and sell it today you would lose (39.00) from holding B Riley Financial or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Gladstone Investment  vs.  B Riley Financial

Gladstone Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

B Riley Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B Riley Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, B Riley is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gladstone Investment and B Riley

The main advantage of trading using opposite Gladstone Investment and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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 Gladstone Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.