Correlation Between Cadence Design and FiscalNote Holdings

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

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

Diversification Opportunities for Cadence Design and FiscalNote Holdings

0.41

Correlation Coefficient

Cadence Design  FiscalNote Holdings

Very weak diversification

The 3 months correlation between Cadence and FiscalNote is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and FiscalNote Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FiscalNote Holdings and Cadence Design 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 Cadence Design Systems are associated (or correlated) with FiscalNote Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FiscalNote Holdings has no effect on the direction of Cadence Design i.e., Cadence Design and FiscalNote Holdings go up and down completely randomly.

Pair Corralation between Cadence Design and FiscalNote Holdings

Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the FiscalNote Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Cadence Design Systems is 3.23 times less risky than FiscalNote Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The FiscalNote Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  120.00  in FiscalNote Holdings on December 23, 2024 and sell it today you would lose (22.00) from holding FiscalNote Holdings or give up 18.33% of portfolio value over 90 days.

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

Cadence Design Systems  vs.  FiscalNote Holdings

Cadence Design Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadence Design Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FiscalNote Holdings

Risk-Adjusted Performance

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 rather sound basic indicators, FiscalNote Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cadence Design and FiscalNote Holdings

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

The idea behind Cadence Design Systems and FiscalNote Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.