Correlation Between RiverNorth Specialty and B Riley

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

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

Diversification Opportunities for RiverNorth Specialty and B Riley

0.29

Correlation Coefficient

RiverNorth Specialty  B Riley

Modest diversification

The 3 months correlation between RiverNorth and RILYM is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance 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 RiverNorth Specialty 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 RiverNorth Specialty Finance 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 RiverNorth Specialty i.e., RiverNorth Specialty and B Riley go up and down completely randomly.

Pair Corralation between RiverNorth Specialty and B Riley

Considering the 90-day investment horizon RiverNorth Specialty is expected to generate 2.36 times less return on investment than B Riley. But when comparing it to its historical volatility, RiverNorth Specialty Finance is 6.74 times less risky than B Riley. It trades about 0.06 of its potential returns per unit of risk. B Riley Financial, is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,035  in B Riley Financial, on September 30, 2024 and sell it today you would earn a total of  238.00  from holding B Riley Financial, or generate 11.7% return on investment over 90 days.

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

RiverNorth Specialty Finance  vs.  B Riley Financial,

RiverNorth Specialty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Specialty Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RiverNorth Specialty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

B Riley Financial,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, B Riley displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RiverNorth Specialty and B Riley

The main advantage of trading using opposite RiverNorth Specialty and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorth Specialty 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 RiverNorth Specialty Finance 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.