Correlation Between Global X and NEOS ETF

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

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

Diversification Opportunities for Global X and NEOS ETF

0.93

Correlation Coefficient

Global X  NEOS ETF

Almost no diversification

The 3 months correlation between Global and NEOS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP 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 Global X 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 Global X SP 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 Global X i.e., Global X and NEOS ETF go up and down completely randomly.

Pair Corralation between Global X and NEOS ETF

Given the investment horizon of 90 days Global X is expected to generate 1.04 times less return on investment than NEOS ETF. But when comparing it to its historical volatility, Global X SP is 2.06 times less risky than NEOS ETF. It trades about 0.24 of its potential returns per unit of risk. NEOS ETF Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,501  in NEOS ETF Trust on September 29, 2024 and sell it today you would earn a total of  132.00  from holding NEOS ETF Trust or generate 5.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Global X SP  vs.  NEOS ETF Trust

Global X SP

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, Global X is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

NEOS ETF Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEOS ETF Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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 Global X and NEOS ETF

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

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.