Correlation Between FT Cboe and NEOS ETF

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

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

Diversification Opportunities for FT Cboe and NEOS ETF

0.48

Correlation Coefficient

FT Cboe  NEOS ETF

Very weak diversification

The 3 months correlation between KNG and NEOS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest 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 FT Cboe 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 FT Cboe Vest 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 FT Cboe i.e., FT Cboe and NEOS ETF go up and down completely randomly.

Pair Corralation between FT Cboe and NEOS ETF

Considering the 90-day investment horizon FT Cboe is expected to generate 8.91 times less return on investment than NEOS ETF. But when comparing it to its historical volatility, FT Cboe Vest is 1.38 times less risky than NEOS ETF. It trades about 0.03 of its potential returns per unit of risk. NEOS ETF Trust is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,457  in NEOS ETF Trust on September 12, 2024 and sell it today you would earn a total of  200.11  from holding NEOS ETF Trust or generate 8.14% return on investment over 90 days.

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

FT Cboe Vest  vs.  NEOS ETF Trust

FT Cboe Vest

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FT Cboe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NEOS ETF Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEOS ETF Trust are ranked lower than 14 (%) 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.

Pair Trading with FT Cboe and NEOS ETF

The main advantage of trading using opposite FT Cboe and NEOS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe 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 FT Cboe Vest 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.