Correlation Between NEOS ETF and PeakShares Sector
Can any of the company-specific risk be diversified away by investing in both NEOS ETF and PeakShares Sector 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 PeakShares Sector 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 PeakShares Sector Rotation, you can compare the effects of market volatilities on NEOS ETF and PeakShares Sector 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 PeakShares Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEOS ETF and PeakShares Sector.
Diversification Opportunities for NEOS ETF and PeakShares Sector
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NEOS and PeakShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and PeakShares Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PeakShares Sector 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 PeakShares Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PeakShares Sector has no effect on the direction of NEOS ETF i.e., NEOS ETF and PeakShares Sector go up and down completely randomly.
Pair Corralation between NEOS ETF and PeakShares Sector
Given the investment horizon of 90 days NEOS ETF is expected to generate 2.4 times less return on investment than PeakShares Sector. But when comparing it to its historical volatility, NEOS ETF Trust is 1.17 times less risky than PeakShares Sector. It trades about 0.07 of its potential returns per unit of risk. PeakShares Sector Rotation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,773 in PeakShares Sector Rotation on August 30, 2024 and sell it today you would earn a total of 86.00 from holding PeakShares Sector Rotation or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEOS ETF Trust vs. PeakShares Sector Rotation
Performance |
| Timeline |
| NEOS ETF Trust |
| PeakShares Sector |
NEOS ETF and PeakShares Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEOS ETF and PeakShares Sector
The main advantage of trading using opposite NEOS ETF and PeakShares Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEOS ETF position performs unexpectedly, PeakShares Sector 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 PeakShares Sector will offset losses from the drop in PeakShares Sector'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 |
| PeakShares Sector vs. Freedom Day Dividend | PeakShares Sector vs. Franklin Templeton ETF | PeakShares Sector vs. iShares MSCI China | PeakShares Sector vs. Tidal Trust II |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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