Correlation Between Sachem Capital and B Riley

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

Diversification Opportunities for Sachem Capital and B Riley

-0.28

Correlation Coefficient

Sachem Capital  B Riley

Very good diversification

The 3 months correlation between Sachem and RILYZ is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp 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 Sachem 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 Sachem Capital Corp 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 Sachem Capital i.e., Sachem Capital and B Riley go up and down completely randomly.

Pair Corralation between Sachem Capital and B Riley

Given the investment horizon of 90 days Sachem Capital is expected to generate 3.35 times less return on investment than B Riley. But when comparing it to its historical volatility, Sachem Capital Corp is 11.01 times less risky than B Riley. It trades about 0.05 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  843.00  in B Riley Financial on October 3, 2024 and sell it today you would lose (19.00) from holding B Riley Financial or give up 2.25% of portfolio value over 90 days.

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

Sachem Capital Corp  vs.  B Riley Financial

Sachem Capital Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sachem Capital Corp are ranked lower than 3 (%) 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.

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.

Pair Trading with Sachem Capital and B Riley

The main advantage of trading using opposite Sachem Capital and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sachem 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 Sachem Capital Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.