Correlation Between Sparta Capital and B Riley

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

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

Diversification Opportunities for Sparta Capital and B Riley

0.52

Correlation Coefficient

Sparta Capital  B Riley

Very weak diversification

The 3 months correlation between Sparta and RILYP is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital 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 Sparta Capital 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 Sparta Capital 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 Sparta Capital i.e., Sparta Capital and B Riley go up and down completely randomly.

Pair Corralation between Sparta Capital and B Riley

Assuming the 90 days horizon Sparta Capital is expected to under-perform the B Riley. In addition to that, Sparta Capital is 2.1 times more volatile than B Riley Financial. It trades about -0.23 of its total potential returns per unit of risk. B Riley Financial is currently generating about -0.01 per unit of volatility. If you would invest  710.00  in B Riley Financial on October 8, 2024 and sell it today you would lose (10.00) from holding B Riley Financial or give up 1.41% of portfolio value over 90 days.

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

Sparta Capital  vs.  B Riley Financial

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

B Riley Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, B Riley reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparta Capital and B Riley

The main advantage of trading using opposite Sparta Capital and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital 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 Sparta Capital 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.