Correlation Between NEOS ETF and Tidal Trust

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

Diversification Opportunities for NEOS ETF and Tidal Trust

-0.89

Correlation Coefficient

NEOS ETF  Tidal Trust

Pay attention - limited upside

The 3 months correlation between NEOS and Tidal is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of NEOS ETF i.e., NEOS ETF and Tidal Trust go up and down completely randomly.

Pair Corralation between NEOS ETF and Tidal Trust

Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 3.5 times more return on investment than Tidal Trust. However, NEOS ETF is 3.5 times more volatile than Tidal Trust II. It trades about 0.13 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.16 per unit of risk. If you would invest  2,614  in NEOS ETF Trust on December 27, 2024 and sell it today you would earn a total of  2,384  from holding NEOS ETF Trust or generate 91.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.33%
Values	Daily Returns

NEOS ETF Trust  vs.  Tidal Trust II

NEOS ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEOS ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, NEOS ETF demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tidal Trust II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with NEOS ETF and Tidal Trust

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

The idea behind NEOS ETF Trust and Tidal Trust II 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.