Correlation Between NEOS ETF and REX AI

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

By analyzing existing cross correlation between NEOS ETF Trust and REX AI Equity, you can compare the effects of market volatilities on NEOS ETF and REX AI 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 NEOS ETF with a short position of REX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEOS ETF and REX AI.

Diversification Opportunities for NEOS ETF and REX AI

0.81

Correlation Coefficient

NEOS ETF  REX AI

Very poor diversification

The 3 months correlation between NEOS and REX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and REX AI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX AI Equity and NEOS ETF 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 NEOS ETF Trust are associated (or correlated) with REX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX AI Equity has no effect on the direction of NEOS ETF i.e., NEOS ETF and REX AI go up and down completely randomly.

Pair Corralation between NEOS ETF and REX AI

Given the investment horizon of 90 days NEOS ETF is expected to generate 1.97 times less return on investment than REX AI. But when comparing it to its historical volatility, NEOS ETF Trust is 1.37 times less risky than REX AI. It trades about 0.12 of its potential returns per unit of risk. REX AI Equity is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,517  in REX AI Equity on August 30, 2024 and sell it today you would earn a total of  519.00  from holding REX AI Equity or generate 11.49% return on investment over 90 days.

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

NEOS ETF Trust  vs.  REX AI Equity

NEOS ETF Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEOS ETF Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, NEOS ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

REX AI Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with NEOS ETF and REX AI

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

The idea behind NEOS ETF Trust and REX AI Equity 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.