Correlation Between B Riley and Sachem Capital

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

Diversification Opportunities for B Riley and Sachem Capital

0.03

Correlation Coefficient

B Riley  Sachem Capital

Significant diversification

The 3 months correlation between RILYZ and Sachem is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding B Riley Financial and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of B Riley i.e., B Riley and Sachem Capital go up and down completely randomly.

Pair Corralation between B Riley and Sachem Capital

Assuming the 90 days horizon B Riley Financial is expected to generate 29.36 times more return on investment than Sachem Capital. However, B Riley is 29.36 times more volatile than Sachem Capital Corp. It trades about 0.01 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.21 per unit of risk. If you would invest  860.00  in B Riley Financial on October 3, 2024 and sell it today you would lose (36.00) from holding B Riley Financial or give up 4.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

B Riley Financial  vs.  Sachem Capital 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. In spite of fairly strong basic indicators, B Riley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sachem Capital Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sachem Capital Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Sachem Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with B Riley and Sachem Capital

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

The idea behind B Riley Financial and Sachem Capital 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.