Correlation Between FiscalNote Holdings and CSP

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

By analyzing existing cross correlation between FiscalNote Holdings and CSP Inc, you can compare the effects of market volatilities on FiscalNote Holdings and CSP 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 CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FiscalNote Holdings and CSP.

Diversification Opportunities for FiscalNote Holdings and CSP

0.53

Correlation Coefficient

FiscalNote Holdings  CSP

Very weak diversification

The 3 months correlation between FiscalNote and CSP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FiscalNote Holdings and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of FiscalNote Holdings i.e., FiscalNote Holdings and CSP go up and down completely randomly.

Pair Corralation between FiscalNote Holdings and CSP

Given the investment horizon of 90 days FiscalNote Holdings is expected to under-perform the CSP. In addition to that, FiscalNote Holdings is 2.01 times more volatile than CSP Inc. It trades about -0.02 of its total potential returns per unit of risk. CSP Inc is currently generating about -0.02 per unit of volatility. If you would invest  1,685  in CSP Inc on December 29, 2024 and sell it today you would lose (150.00) from holding CSP Inc or give up 8.9% of portfolio value over 90 days.

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

FiscalNote Holdings  vs.  CSP Inc

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CSP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CSP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FiscalNote Holdings and CSP

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

The idea behind FiscalNote Holdings and CSP Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.