Correlation Between B Riley and Via Renewables

Can any of the company-specific risk be diversified away by investing in both B Riley and Via Renewables 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 Via Renewables 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 Via Renewables, you can compare the effects of market volatilities on B Riley and Via Renewables 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 Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of B Riley and Via Renewables.

Diversification Opportunities for B Riley and Via Renewables

0.77

Correlation Coefficient

B Riley  Via Renewables

Poor diversification

The 3 months correlation between RILYK and Via is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of B Riley i.e., B Riley and Via Renewables go up and down completely randomly.

Pair Corralation between B Riley and Via Renewables

Assuming the 90 days horizon B Riley Financial is expected to generate 3.16 times more return on investment than Via Renewables. However, B Riley is 3.16 times more volatile than Via Renewables. It trades about 0.17 of its potential returns per unit of risk. Via Renewables is currently generating about 0.28 per unit of risk. If you would invest  1,533  in B Riley Financial on October 6, 2024 and sell it today you would earn a total of  443.00  from holding B Riley Financial or generate 28.9% return on investment over 90 days.

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

B Riley Financial  vs.  Via Renewables

B Riley Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, B Riley disclosed solid returns over the last few months and may actually be approaching a breakup point.

Via Renewables

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with B Riley and Via Renewables

The main advantage of trading using opposite B Riley and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B Riley position performs unexpectedly, Via Renewables 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 Via Renewables will offset losses from the drop in Via Renewables' long position.

The idea behind B Riley Financial and Via Renewables 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.