Correlation Between B Riley and Voya Financial

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

Diversification Opportunities for B Riley and Voya Financial

0.4

Correlation Coefficient

B Riley  Voya Financial

Very weak diversification

The 3 months correlation between RILYL and Voya is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and Voya Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Financial 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 Voya Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Financial has no effect on the direction of B Riley i.e., B Riley and Voya Financial go up and down completely randomly.

Pair Corralation between B Riley and Voya Financial

Assuming the 90 days horizon B Riley Financial is expected to under-perform the Voya Financial. In addition to that, B Riley is 3.76 times more volatile than Voya Financial. It trades about -0.17 of its total potential returns per unit of risk. Voya Financial is currently generating about -0.32 per unit of volatility. If you would invest  2,481  in Voya Financial on September 23, 2024 and sell it today you would lose (138.00) from holding Voya Financial or give up 5.56% of portfolio value over 90 days.

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

B Riley Financial  vs.  Voya Financial

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. Despite latest weak performance, the Preferred Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Voya Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with B Riley and Voya Financial

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

The idea behind B Riley Financial and Voya 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.