Correlation Between Eagle Point and B Riley

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

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

Diversification Opportunities for Eagle Point and B Riley

-0.5

Correlation Coefficient

Eagle Point  B Riley

Very good diversification

The 3 months correlation between Eagle and RILYK is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit 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 Eagle Point 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 Eagle Point Credit 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 Eagle Point i.e., Eagle Point and B Riley go up and down completely randomly.

Pair Corralation between Eagle Point and B Riley

Given the investment horizon of 90 days Eagle Point is expected to generate 4.44 times less return on investment than B Riley. But when comparing it to its historical volatility, Eagle Point Credit is 10.75 times less risky than B Riley. It trades about 0.06 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,071  in B Riley Financial on September 24, 2024 and sell it today you would lose (81.00) from holding B Riley Financial or give up 3.91% of portfolio value over 90 days.

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

Eagle Point Credit  vs.  B Riley Financial

Eagle Point Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Point Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Eagle Point is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

B Riley Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 8 (%) 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 Eagle Point and B Riley

The main advantage of trading using opposite Eagle Point and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point 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 Eagle Point Credit 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.