Correlation Between VirnetX Holding and Dropbox

Can any of the company-specific risk be diversified away by investing in both VirnetX Holding and Dropbox 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 Dropbox 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 Dropbox, you can compare the effects of market volatilities on VirnetX Holding and Dropbox 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 Dropbox. Check out your portfolio center. Please also check ongoing floating volatility patterns of VirnetX Holding and Dropbox.

Diversification Opportunities for VirnetX Holding and Dropbox

-0.63

Correlation Coefficient

VirnetX Holding  Dropbox

Excellent diversification

The 3 months correlation between VirnetX and Dropbox is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VirnetX Holding Corp and Dropbox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dropbox 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 Dropbox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dropbox has no effect on the direction of VirnetX Holding i.e., VirnetX Holding and Dropbox go up and down completely randomly.

Pair Corralation between VirnetX Holding and Dropbox

Considering the 90-day investment horizon VirnetX Holding Corp is expected to generate 4.57 times more return on investment than Dropbox. However, VirnetX Holding is 4.57 times more volatile than Dropbox. It trades about 0.29 of its potential returns per unit of risk. Dropbox is currently generating about -0.02 per unit of risk. If you would invest  850.00  in VirnetX Holding Corp on April 24, 2025 and sell it today you would earn a total of  1,241  from holding VirnetX Holding Corp or generate 146.0% return on investment over 90 days.

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

VirnetX Holding Corp  vs.  Dropbox

VirnetX Holding Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VirnetX Holding Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, VirnetX Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dropbox

Risk-Adjusted Performance

Weak

Over the last 90 days Dropbox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Dropbox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VirnetX Holding and Dropbox

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

The idea behind VirnetX Holding Corp and Dropbox 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.