Correlation Between CDW Corp and FiscalNote Holdings

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

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

Diversification Opportunities for CDW Corp and FiscalNote Holdings

0.76

Correlation Coefficient

CDW Corp  FiscalNote Holdings

Poor diversification

The 3 months correlation between CDW and FiscalNote is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and FiscalNote Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FiscalNote Holdings and CDW Corp 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 CDW Corp 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 CDW Corp i.e., CDW Corp and FiscalNote Holdings go up and down completely randomly.

Pair Corralation between CDW Corp and FiscalNote Holdings

Considering the 90-day investment horizon CDW Corp is expected to generate 0.65 times more return on investment than FiscalNote Holdings. However, CDW Corp is 1.53 times less risky than FiscalNote Holdings. It trades about -0.05 of its potential returns per unit of risk. FiscalNote Holdings is currently generating about -0.14 per unit of risk. If you would invest  21,532  in CDW Corp on August 13, 2024 and sell it today you would lose (1,545) from holding CDW Corp or give up 7.18% of portfolio value over 90 days.

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

CDW Corp  vs.  FiscalNote Holdings

CDW Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CDW Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, CDW Corp is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with CDW Corp and FiscalNote Holdings

The main advantage of trading using opposite CDW Corp and FiscalNote Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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 CDW Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.