Correlation Between VirnetX Holding and Novelis

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

By analyzing existing cross correlation between VirnetX Holding Corp and Novelis Corp 475, you can compare the effects of market volatilities on VirnetX Holding and Novelis 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 VirnetX Holding with a short position of Novelis. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirnetX Holding and Novelis.

Diversification Opportunities for VirnetX Holding and Novelis

0.26

Correlation Coefficient

VirnetX Holding  Novelis

Modest diversification

The 3 months correlation between VirnetX and Novelis is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding VirnetX Holding Corp and Novelis Corp 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novelis Corp 475 and VirnetX Holding 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 VirnetX Holding Corp are associated (or correlated) with Novelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novelis Corp 475 has no effect on the direction of VirnetX Holding i.e., VirnetX Holding and Novelis go up and down completely randomly.

Pair Corralation between VirnetX Holding and Novelis

Considering the 90-day investment horizon VirnetX Holding Corp is expected to under-perform the Novelis. In addition to that, VirnetX Holding is 4.36 times more volatile than Novelis Corp 475. It trades about -0.25 of its total potential returns per unit of risk. Novelis Corp 475 is currently generating about -0.22 per unit of volatility. If you would invest  9,634  in Novelis Corp 475 on September 17, 2024 and sell it today you would lose (754.00) from holding Novelis Corp 475 or give up 7.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

VirnetX Holding Corp  vs.  Novelis Corp 475

VirnetX Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VirnetX Holding Corp 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 technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Novelis Corp 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novelis Corp 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Novelis Corp 475 investors.

Pair Trading with VirnetX Holding and Novelis

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

The idea behind VirnetX Holding Corp and Novelis Corp 475 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.