Correlation Between ETC 6 and NEOS ETF

Can any of the company-specific risk be diversified away by investing in both ETC 6 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 ETC 6 and NEOS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETC 6 Meridian and NEOS ETF Trust, you can compare the effects of market volatilities on ETC 6 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 ETC 6 with a short position of NEOS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and NEOS ETF.

Diversification Opportunities for ETC 6 and NEOS ETF

0.58

Correlation Coefficient

ETC 6  NEOS ETF

Very weak diversification

The 3 months correlation between ETC and NEOS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian 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 ETC 6 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 ETC 6 Meridian 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 ETC 6 i.e., ETC 6 and NEOS ETF go up and down completely randomly.

Pair Corralation between ETC 6 and NEOS ETF

Given the investment horizon of 90 days ETC 6 Meridian is expected to generate 1.11 times more return on investment than NEOS ETF. However, ETC 6 is 1.11 times more volatile than NEOS ETF Trust. It trades about 0.16 of its potential returns per unit of risk. NEOS ETF Trust is currently generating about 0.12 per unit of risk. If you would invest  3,653  in ETC 6 Meridian on December 20, 2024 and sell it today you would earn a total of  234.00  from holding ETC 6 Meridian or generate 6.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.49%
Values	Daily Returns

ETC 6 Meridian  vs.  NEOS ETF Trust

ETC 6 Meridian

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETC 6 Meridian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ETC 6 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with ETC 6 and NEOS ETF

The main advantage of trading using opposite ETC 6 and NEOS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC 6 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 ETC 6 Meridian 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.