Correlation Between SiriusPoint and B Riley

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

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

Diversification Opportunities for SiriusPoint and B Riley

0.27

Correlation Coefficient

SiriusPoint  B Riley

Modest diversification

The 3 months correlation between SiriusPoint and RILYT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SiriusPoint 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 SiriusPoint 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 SiriusPoint 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 SiriusPoint i.e., SiriusPoint and B Riley go up and down completely randomly.

Pair Corralation between SiriusPoint and B Riley

Assuming the 90 days trading horizon SiriusPoint is expected to generate 2.14 times less return on investment than B Riley. But when comparing it to its historical volatility, SiriusPoint is 9.05 times less risky than B Riley. It trades about 0.26 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,115  in B Riley Financial on September 1, 2024 and sell it today you would earn a total of  40.00  from holding B Riley Financial or generate 3.59% return on investment over 90 days.

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

SiriusPoint  vs.  B Riley Financial

SiriusPoint

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SiriusPoint are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, SiriusPoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

B Riley Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, B Riley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SiriusPoint and B Riley

The main advantage of trading using opposite SiriusPoint and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiriusPoint 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 SiriusPoint 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.