Correlation Between Newtek Business and B Riley

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

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

Diversification Opportunities for Newtek Business and B Riley

-0.19

Correlation Coefficient

Newtek Business  B Riley

Good diversification

The 3 months correlation between Newtek and RILYL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services 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 Newtek Business 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 Newtek Business Services 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 Newtek Business i.e., Newtek Business and B Riley go up and down completely randomly.

Pair Corralation between Newtek Business and B Riley

Assuming the 90 days horizon Newtek Business is expected to generate 1.99 times less return on investment than B Riley. But when comparing it to its historical volatility, Newtek Business Services is 24.44 times less risky than B Riley. It trades about 0.17 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  849.00  in B Riley Financial on September 4, 2024 and sell it today you would lose (54.00) from holding B Riley Financial or give up 6.36% of portfolio value over 90 days.

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

Newtek Business Services  vs.  B Riley Financial

Newtek Business Services

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Newtek Business is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B Riley Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, B Riley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Newtek Business and B Riley

The main advantage of trading using opposite Newtek Business and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newtek Business 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 Newtek Business Services 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.