Correlation Between FiscalNote Holdings and Castellum

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

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

Diversification Opportunities for FiscalNote Holdings and Castellum

0.19

Correlation Coefficient

FiscalNote Holdings  Castellum

Average diversification

The 3 months correlation between FiscalNote and Castellum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding FiscalNote Holdings and Castellum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum 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 Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum has no effect on the direction of FiscalNote Holdings i.e., FiscalNote Holdings and Castellum go up and down completely randomly.

Pair Corralation between FiscalNote Holdings and Castellum

Given the investment horizon of 90 days FiscalNote Holdings is expected to generate 3.17 times less return on investment than Castellum. But when comparing it to its historical volatility, FiscalNote Holdings is 1.45 times less risky than Castellum. It trades about 0.02 of its potential returns per unit of risk. Castellum is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Castellum on October 5, 2024 and sell it today you would earn a total of  72.00  from holding Castellum or generate 68.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.78%
Values	Daily Returns

FiscalNote Holdings  vs.  Castellum

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 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.

Castellum

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FiscalNote Holdings and Castellum

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

The idea behind FiscalNote Holdings and Castellum 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.