Correlation Between FiscalNote Holdings and Innodata

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

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

Diversification Opportunities for FiscalNote Holdings and Innodata

0.7

Correlation Coefficient

FiscalNote Holdings  Innodata

Poor diversification

The 3 months correlation between FiscalNote and Innodata is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FiscalNote Holdings and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata 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 Innodata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodata has no effect on the direction of FiscalNote Holdings i.e., FiscalNote Holdings and Innodata go up and down completely randomly.

Pair Corralation between FiscalNote Holdings and Innodata

Given the investment horizon of 90 days FiscalNote Holdings is expected to generate 0.53 times more return on investment than Innodata. However, FiscalNote Holdings is 1.89 times less risky than Innodata. It trades about 0.08 of its potential returns per unit of risk. Innodata is currently generating about 0.04 per unit of risk. If you would invest  62.00  in FiscalNote Holdings on February 14, 2025 and sell it today you would earn a total of  3.00  from holding FiscalNote Holdings or generate 4.84% return on investment over 90 days.

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

FiscalNote Holdings  vs.  Innodata

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Innodata

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innodata has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with FiscalNote Holdings and Innodata

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

The idea behind FiscalNote Holdings and Innodata 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.