Correlation Between FiscalNote Holdings and International Business

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

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

Diversification Opportunities for FiscalNote Holdings and International Business

-0.48

Correlation Coefficient

FiscalNote Holdings  International Business

Very good diversification

The 3 months correlation between FiscalNote and International is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding FiscalNote Holdings and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and FiscalNote 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 FiscalNote Holdings are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of FiscalNote Holdings i.e., FiscalNote Holdings and International Business go up and down completely randomly.

Pair Corralation between FiscalNote Holdings and International Business

Given the investment horizon of 90 days FiscalNote Holdings is expected to under-perform the International Business. In addition to that, FiscalNote Holdings is 1.74 times more volatile than International Business Machines. It trades about -0.49 of its total potential returns per unit of risk. International Business Machines is currently generating about -0.26 per unit of volatility. If you would invest  22,712  in International Business Machines on August 6, 2024 and sell it today you would lose (2,080) from holding International Business Machines or give up 9.16% of portfolio value over 90 days.

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

FiscalNote Holdings  vs.  International Business Machine

FiscalNote Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FiscalNote Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

International Business

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with FiscalNote Holdings and International Business

The main advantage of trading using opposite FiscalNote Holdings and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FiscalNote Holdings position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.

The idea behind FiscalNote Holdings and International Business Machines 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.