Correlation Between NEOS ETF and Nicholas Global

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

Diversification Opportunities for NEOS ETF and Nicholas Global

0.98

Correlation Coefficient

NEOS ETF  Nicholas Global

Almost no diversification

The 3 months correlation between NEOS and Nicholas is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and Nicholas Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Global 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 Nicholas Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Global Equity has no effect on the direction of NEOS ETF i.e., NEOS ETF and Nicholas Global go up and down completely randomly.

Pair Corralation between NEOS ETF and Nicholas Global

Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 1.19 times more return on investment than Nicholas Global. However, NEOS ETF is 1.19 times more volatile than Nicholas Global Equity. It trades about 0.16 of its potential returns per unit of risk. Nicholas Global Equity is currently generating about 0.15 per unit of risk. If you would invest  2,457  in NEOS ETF Trust on September 12, 2024 and sell it today you would earn a total of  176.00  from holding NEOS ETF Trust or generate 7.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

NEOS ETF Trust  vs.  Nicholas Global Equity

NEOS ETF Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEOS ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, NEOS ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nicholas Global Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nicholas Global Equity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nicholas Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NEOS ETF and Nicholas Global

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

The idea behind NEOS ETF Trust and Nicholas Global 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.