Correlation Between B Riley and Gladstone Investment

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

Diversification Opportunities for B Riley and Gladstone Investment

0.5

Correlation Coefficient

B Riley  Gladstone Investment

Very weak diversification

The 3 months correlation between RILYT and Gladstone is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of B Riley i.e., B Riley and Gladstone Investment go up and down completely randomly.

Pair Corralation between B Riley and Gladstone Investment

Assuming the 90 days horizon B Riley Financial is expected to under-perform the Gladstone Investment. In addition to that, B Riley is 11.48 times more volatile than Gladstone Investment. It trades about 0.0 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.06 per unit of volatility. If you would invest  2,298  in Gladstone Investment on September 20, 2024 and sell it today you would earn a total of  170.00  from holding Gladstone Investment or generate 7.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

B Riley Financial  vs.  Gladstone Investment

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with B Riley and Gladstone Investment

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

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