Correlation Between IShares ESG and NEOS ETF
Can any of the company-specific risk be diversified away by investing in both IShares ESG 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 IShares ESG and NEOS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Aware and NEOS ETF Trust, you can compare the effects of market volatilities on IShares ESG 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 IShares ESG with a short position of NEOS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and NEOS ETF.
Diversification Opportunities for IShares ESG and NEOS ETF
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and NEOS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware 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 IShares ESG 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 iShares ESG Aware 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 IShares ESG i.e., IShares ESG and NEOS ETF go up and down completely randomly.
Pair Corralation between IShares ESG and NEOS ETF
Given the investment horizon of 90 days IShares ESG is expected to generate 2.14 times less return on investment than NEOS ETF. But when comparing it to its historical volatility, iShares ESG Aware is 2.54 times less risky than NEOS ETF. It trades about 0.14 of its potential returns per unit of risk. NEOS ETF Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,302 in NEOS ETF Trust on September 1, 2024 and sell it today you would earn a total of 299.00 from holding NEOS ETF Trust or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aware vs. NEOS ETF Trust
Performance |
| Timeline |
| iShares ESG Aware |
| NEOS ETF Trust |
IShares ESG and NEOS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and NEOS ETF
The main advantage of trading using opposite IShares ESG and NEOS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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.| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Advanced |
| NEOS ETF vs. Global X Russell | NEOS ETF vs. Global X SP | NEOS ETF vs. Global X NASDAQ | NEOS ETF vs. Amplify CWP Enhanced |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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