Correlation Between RenaissanceRe Holdings and B Riley

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

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

Diversification Opportunities for RenaissanceRe Holdings and B Riley

0.07

Correlation Coefficient

RenaissanceRe Holdings  B Riley

Significant diversification

The 3 months correlation between RenaissanceRe and RILY is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings 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 RenaissanceRe Holdings 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 RenaissanceRe Holdings 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 RenaissanceRe Holdings i.e., RenaissanceRe Holdings and B Riley go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and B Riley

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 11.05 times less return on investment than B Riley. But when comparing it to its historical volatility, RenaissanceRe Holdings is 13.5 times less risky than B Riley. It trades about 0.04 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  584.00  in B Riley Financial on September 2, 2024 and sell it today you would earn a total of  2.00  from holding B Riley Financial or generate 0.34% return on investment over 90 days.

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

RenaissanceRe Holdings  vs.  B Riley Financial

RenaissanceRe Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RenaissanceRe Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RenaissanceRe Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

B Riley Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, B Riley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RenaissanceRe Holdings and B Riley

The main advantage of trading using opposite RenaissanceRe Holdings and B Riley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings 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 RenaissanceRe Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.