Correlation Between International Drawdown and NEOS ETF

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

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

Diversification Opportunities for International Drawdown and NEOS ETF

0.37

Correlation Coefficient

International Drawdown  NEOS ETF

Weak diversification

The 3 months correlation between International and NEOS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding International Drawdown Managed and NEOS ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEOS ETF Trust and International Drawdown 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 International Drawdown Managed are associated (or correlated) with NEOS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEOS ETF Trust has no effect on the direction of International Drawdown i.e., International Drawdown and NEOS ETF go up and down completely randomly.

Pair Corralation between International Drawdown and NEOS ETF

Given the investment horizon of 90 days International Drawdown is expected to generate 5.23 times less return on investment than NEOS ETF. In addition to that, International Drawdown is 1.08 times more volatile than NEOS ETF Trust. It trades about 0.02 of its total potential returns per unit of risk. NEOS ETF Trust is currently generating about 0.1 per unit of volatility. If you would invest  2,593  in NEOS ETF Trust on December 3, 2024 and sell it today you would earn a total of  85.00  from holding NEOS ETF Trust or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.52%
Values	Daily Returns

International Drawdown Managed  vs.  NEOS ETF Trust

International Drawdown

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Drawdown Managed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, International Drawdown is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

NEOS ETF Trust

Risk-Adjusted Performance

OK

Over the last 90 days NEOS ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, NEOS ETF is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with International Drawdown and NEOS ETF

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

The idea behind International Drawdown Managed and NEOS ETF Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.