Correlation Between CITIGROUP and VirnetX Holding

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

By analyzing existing cross correlation between CITIGROUP INC 34 and VirnetX Holding Corp, you can compare the effects of market volatilities on CITIGROUP and VirnetX Holding 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 CITIGROUP with a short position of VirnetX Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIGROUP and VirnetX Holding.

Diversification Opportunities for CITIGROUP and VirnetX Holding

-0.15

Correlation Coefficient

CITIGROUP  VirnetX Holding

Good diversification

The 3 months correlation between CITIGROUP and VirnetX is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CITIGROUP INC 34 and VirnetX Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirnetX Holding Corp and CITIGROUP 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 CITIGROUP INC 34 are associated (or correlated) with VirnetX Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirnetX Holding Corp has no effect on the direction of CITIGROUP i.e., CITIGROUP and VirnetX Holding go up and down completely randomly.

Pair Corralation between CITIGROUP and VirnetX Holding

Assuming the 90 days trading horizon CITIGROUP INC 34 is expected to under-perform the VirnetX Holding. But the bond apears to be less risky and, when comparing its historical volatility, CITIGROUP INC 34 is 2.51 times less risky than VirnetX Holding. The bond trades about -0.2 of its potential returns per unit of risk. The VirnetX Holding Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  885.00  in VirnetX Holding Corp on December 4, 2024 and sell it today you would earn a total of  32.00  from holding VirnetX Holding Corp or generate 3.62% return on investment over 90 days.

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

CITIGROUP INC 34  vs.  VirnetX Holding Corp

CITIGROUP INC 34

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIGROUP INC 34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIGROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VirnetX Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIGROUP and VirnetX Holding

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

The idea behind CITIGROUP INC 34 and VirnetX Holding Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.