Correlation Between B Riley and XOMA Corp

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

Diversification Opportunities for B Riley and XOMA Corp

-0.12

Correlation Coefficient

B Riley  XOMA Corp

Good diversification

The 3 months correlation between RILYP and XOMA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and XOMA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA Corp 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 XOMA Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA Corp has no effect on the direction of B Riley i.e., B Riley and XOMA Corp go up and down completely randomly.

Pair Corralation between B Riley and XOMA Corp

Assuming the 90 days horizon B Riley Financial is expected to generate 10.6 times more return on investment than XOMA Corp. However, B Riley is 10.6 times more volatile than XOMA Corp. It trades about 0.01 of its potential returns per unit of risk. XOMA Corp is currently generating about 0.08 per unit of risk. If you would invest  856.00  in B Riley Financial on September 4, 2024 and sell it today you would lose (83.00) from holding B Riley Financial or give up 9.7% of portfolio value over 90 days.

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

B Riley Financial  vs.  XOMA Corp

B Riley Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, B Riley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XOMA Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, XOMA Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with B Riley and XOMA Corp

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

The idea behind B Riley Financial and XOMA Corp 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.