Correlation Between Voya Financial and B Riley

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

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

Diversification Opportunities for Voya Financial and B Riley

0.4

Correlation Coefficient

Voya Financial  B Riley

Very weak diversification

The 3 months correlation between Voya and RILYL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Voya Financial 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 Voya Financial 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 Voya Financial 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 Voya Financial i.e., Voya Financial and B Riley go up and down completely randomly.

Pair Corralation between Voya Financial and B Riley

Assuming the 90 days trading horizon Voya Financial is expected to generate 0.27 times more return on investment than B Riley. However, Voya Financial is 3.76 times less risky than B Riley. It trades about -0.32 of its potential returns per unit of risk. B Riley Financial is currently generating about -0.17 per unit of risk. If you would invest  2,481  in Voya Financial on September 23, 2024 and sell it today you would lose (138.00) from holding Voya Financial or give up 5.56% of portfolio value over 90 days.

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

Voya Financial  vs.  B Riley Financial

Voya Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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. Despite latest weak performance, the Preferred Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Voya Financial and B Riley

The main advantage of trading using opposite Voya Financial and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Financial 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 Voya Financial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.