Correlation Between Carlyle and B Riley

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

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

Diversification Opportunities for Carlyle and B Riley

0.77

Correlation Coefficient

Carlyle  B Riley

Poor diversification

The 3 months correlation between Carlyle and RILYK is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group 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 Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and B Riley go up and down completely randomly.

Pair Corralation between Carlyle and B Riley

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.72 times more return on investment than B Riley. However, Carlyle Group is 1.39 times less risky than B Riley. It trades about 0.24 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.16 per unit of risk. If you would invest  3,822  in Carlyle Group on September 3, 2024 and sell it today you would earn a total of  1,456  from holding Carlyle Group or generate 38.1% return on investment over 90 days.

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

Carlyle Group  vs.  B Riley Financial

Carlyle Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

B Riley Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, B Riley disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlyle and B Riley

The main advantage of trading using opposite Carlyle and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.