Correlation Between FT Cboe and NEOS Russell
Can any of the company-specific risk be diversified away by investing in both FT Cboe and NEOS Russell 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 FT Cboe and NEOS Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Cboe Vest and NEOS Russell 2000, you can compare the effects of market volatilities on FT Cboe and NEOS Russell 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 FT Cboe with a short position of NEOS Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and NEOS Russell.
Diversification Opportunities for FT Cboe and NEOS Russell
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KNG and NEOS is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and NEOS Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEOS Russell 2000 and FT Cboe 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 FT Cboe Vest are associated (or correlated) with NEOS Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEOS Russell 2000 has no effect on the direction of FT Cboe i.e., FT Cboe and NEOS Russell go up and down completely randomly.
Pair Corralation between FT Cboe and NEOS Russell
Considering the 90-day investment horizon FT Cboe is expected to generate 2.25 times less return on investment than NEOS Russell. But when comparing it to its historical volatility, FT Cboe Vest is 1.58 times less risky than NEOS Russell. It trades about 0.05 of its potential returns per unit of risk. NEOS Russell 2000 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,538 in NEOS Russell 2000 on November 9, 2024 and sell it today you would earn a total of 464.00 from holding NEOS Russell 2000 or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 31.64% |
| Values | Daily Returns |
FT Cboe Vest vs. NEOS Russell 2000
Performance |
| Timeline |
| FT Cboe Vest |
| NEOS Russell 2000 |
FT Cboe and NEOS Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Cboe and NEOS Russell
The main advantage of trading using opposite FT Cboe and NEOS Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe position performs unexpectedly, NEOS Russell 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 Russell will offset losses from the drop in NEOS Russell's long position.| FT Cboe vs. Global X SP | FT Cboe vs. Global X Nasdaq | FT Cboe vs. First Trust BuyWrite | FT Cboe vs. Amplify CWP Enhanced |
| NEOS Russell vs. Dimensional ETF Trust | NEOS Russell vs. Vanguard Small Cap Index | NEOS Russell vs. First Trust Multi Manager | NEOS Russell vs. Vanguard SP Small Cap |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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