Correlation Between NEOS ETF and IShares SP

Can any of the company-specific risk be diversified away by investing in both NEOS ETF and IShares SP 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 IShares SP 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 iShares SP 500, you can compare the effects of market volatilities on NEOS ETF and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEOS ETF and IShares SP.

Diversification Opportunities for NEOS ETF and IShares SP

-0.69

Correlation Coefficient

NEOS ETF  IShares SP

Excellent diversification

The 3 months correlation between NEOS and IShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of NEOS ETF i.e., NEOS ETF and IShares SP go up and down completely randomly.

Pair Corralation between NEOS ETF and IShares SP

Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 16.09 times more return on investment than IShares SP. However, NEOS ETF is 16.09 times more volatile than iShares SP 500. It trades about 0.13 of its potential returns per unit of risk. iShares SP 500 is currently generating about -0.05 per unit of risk. If you would invest  2,597  in NEOS ETF Trust on December 28, 2024 and sell it today you would earn a total of  2,401  from holding NEOS ETF Trust or generate 92.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.67%
Values	Daily Returns

NEOS ETF Trust  vs.  iShares SP 500

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 unsteady basic indicators, NEOS ETF demonstrated solid returns over the last few months and may actually be approaching a breakup point.

iShares SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NEOS ETF and IShares SP

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

The idea behind NEOS ETF Trust and iShares SP 500 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.