Correlation Between XOMA and B Riley

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

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

Diversification Opportunities for XOMA and B Riley

-0.1

Correlation Coefficient

XOMA  B Riley

Good diversification

The 3 months correlation between XOMA and RILYP is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding XOMA 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 XOMA 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 XOMA Corporation 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 XOMA i.e., XOMA and B Riley go up and down completely randomly.

Pair Corralation between XOMA and B Riley

Assuming the 90 days horizon XOMA Corporation is expected to generate 0.06 times more return on investment than B Riley. However, XOMA Corporation is 16.69 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 -0.15 per unit of risk. If you would invest  2,509  in XOMA Corporation on October 25, 2024 and sell it today you would earn a total of  23.00  from holding XOMA Corporation or generate 0.92% return on investment over 90 days.

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

XOMA Corp.  vs.  B Riley Financial

XOMA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the 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. Even with conflicting performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with XOMA and B Riley

The main advantage of trading using opposite XOMA and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA 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 XOMA Corporation 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.