Correlation Between NEOS ETF and ZEGA Buy

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

Diversification Opportunities for NEOS ETF and ZEGA Buy

-0.74

Correlation Coefficient

NEOS ETF  ZEGA Buy

Pay attention - limited upside

The 3 months correlation between NEOS and ZEGA is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and ZEGA Buy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEGA Buy 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 ZEGA Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEGA Buy has no effect on the direction of NEOS ETF i.e., NEOS ETF and ZEGA Buy go up and down completely randomly.

Pair Corralation between NEOS ETF and ZEGA Buy

Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 17.17 times more return on investment than ZEGA Buy. However, NEOS ETF is 17.17 times more volatile than ZEGA Buy and. It trades about 0.13 of its potential returns per unit of risk. ZEGA Buy and is currently generating about -0.1 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	Weak
Accuracy	91.8%
Values	Daily Returns

NEOS ETF Trust  vs.  ZEGA Buy and

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.

ZEGA Buy

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZEGA Buy and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, ZEGA Buy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NEOS ETF and ZEGA Buy

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

The idea behind NEOS ETF Trust and ZEGA Buy and 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.