Correlation Between NEOS ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both NEOS ETF and First Trust 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 First Trust 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 First Trust BuyWrite, you can compare the effects of market volatilities on NEOS ETF and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEOS ETF and First Trust.
Diversification Opportunities for NEOS ETF and First Trust
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NEOS and First is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and First Trust BuyWrite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust BuyWrite 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust BuyWrite has no effect on the direction of NEOS ETF i.e., NEOS ETF and First Trust go up and down completely randomly.
Pair Corralation between NEOS ETF and First Trust
Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 1.06 times more return on investment than First Trust. However, NEOS ETF is 1.06 times more volatile than First Trust BuyWrite. It trades about 0.15 of its potential returns per unit of risk. First Trust BuyWrite is currently generating about 0.16 per unit of risk. If you would invest 2,597 in NEOS ETF Trust on November 9, 2024 and sell it today you would earn a total of 55.00 from holding NEOS ETF Trust or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEOS ETF Trust vs. First Trust BuyWrite
Performance |
| Timeline |
| NEOS ETF Trust |
| First Trust BuyWrite |
NEOS ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEOS ETF and First Trust
The main advantage of trading using opposite NEOS ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEOS ETF position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| NEOS ETF vs. Global X Russell | NEOS ETF vs. Global X SP | NEOS ETF vs. Global X NASDAQ | NEOS ETF vs. Amplify CWP Enhanced |
| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust Senior | First Trust vs. First Trust Income |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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