Correlation Between NEOS ETF and FT Cboe

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

Diversification Opportunities for NEOS ETF and FT Cboe

0.92

Correlation Coefficient

NEOS ETF  FT Cboe

Almost no diversification

The 3 months correlation between NEOS and RDVI is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of NEOS ETF i.e., NEOS ETF and FT Cboe go up and down completely randomly.

Pair Corralation between NEOS ETF and FT Cboe

Given the investment horizon of 90 days NEOS ETF is expected to generate 1.35 times less return on investment than FT Cboe. But when comparing it to its historical volatility, NEOS ETF Trust is 1.49 times less risky than FT Cboe. It trades about 0.17 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,380  in FT Cboe Vest on September 3, 2024 and sell it today you would earn a total of  250.00  from holding FT Cboe Vest or generate 10.5% return on investment over 90 days.

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

NEOS ETF Trust  vs.  FT Cboe Vest

NEOS ETF Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEOS ETF Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, NEOS ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FT Cboe Vest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, FT Cboe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NEOS ETF and FT Cboe

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

The idea behind NEOS ETF Trust and FT Cboe Vest 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 Commodity Directory module to find actively traded commodities issued by global exchanges.