Correlation Between NEOS ETF and REX FANG

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

Diversification Opportunities for NEOS ETF and REX FANG

-0.67

Correlation Coefficient

NEOS ETF  REX FANG

Excellent diversification

The 3 months correlation between NEOS and REX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of NEOS ETF i.e., NEOS ETF and REX FANG go up and down completely randomly.

Pair Corralation between NEOS ETF and REX FANG

Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 0.42 times more return on investment than REX FANG. However, NEOS ETF Trust is 2.37 times less risky than REX FANG. It trades about 0.13 of its potential returns per unit of risk. REX FANG Innovation is currently generating about -0.08 per unit of risk. If you would invest  2,592  in NEOS ETF Trust on December 18, 2024 and sell it today you would earn a total of  86.00  from holding NEOS ETF Trust or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	72.88%
Values	Daily Returns

NEOS ETF Trust  vs.  REX FANG Innovation

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.

REX FANG Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days REX FANG Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with NEOS ETF and REX FANG

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

The idea behind NEOS ETF Trust and REX FANG Innovation 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.