Correlation Between RenaissanceRe Holdings and B Riley

Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and B Riley 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 RenaissanceRe Holdings and B Riley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RenaissanceRe Holdings and B Riley Financial, you can compare the effects of market volatilities on RenaissanceRe Holdings and B Riley 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 RenaissanceRe Holdings with a short position of B Riley. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and B Riley.

Diversification Opportunities for RenaissanceRe Holdings and B Riley

0.2

Correlation Coefficient

RenaissanceRe Holdings  B Riley

Modest diversification

The 3 months correlation between RenaissanceRe and RILY is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and B Riley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Riley Financial and RenaissanceRe Holdings 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 RenaissanceRe Holdings are associated (or correlated) with B Riley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Riley Financial has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and B Riley go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and B Riley

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 0.07 times more return on investment than B Riley. However, RenaissanceRe Holdings is 13.45 times less risky than B Riley. It trades about -0.02 of its potential returns per unit of risk. B Riley Financial is currently generating about -0.03 per unit of risk. If you would invest  2,324  in RenaissanceRe Holdings on October 2, 2024 and sell it today you would lose (73.00) from holding RenaissanceRe Holdings or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

RenaissanceRe Holdings  vs.  B Riley Financial

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RenaissanceRe Holdings 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 stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 fairly strong essential indicators, B Riley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RenaissanceRe Holdings and B Riley

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

The idea behind RenaissanceRe Holdings and B Riley 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.