Correlation Between NEOS ETF and WisdomTree CBOE
Can any of the company-specific risk be diversified away by investing in both NEOS ETF and WisdomTree CBOE 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 WisdomTree CBOE 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 WisdomTree CBOE SP, you can compare the effects of market volatilities on NEOS ETF and WisdomTree CBOE 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 WisdomTree CBOE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEOS ETF and WisdomTree CBOE.
Diversification Opportunities for NEOS ETF and WisdomTree CBOE
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NEOS and WisdomTree is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding NEOS ETF Trust and WisdomTree CBOE SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree CBOE SP 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 WisdomTree CBOE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree CBOE SP has no effect on the direction of NEOS ETF i.e., NEOS ETF and WisdomTree CBOE go up and down completely randomly.
Pair Corralation between NEOS ETF and WisdomTree CBOE
Given the investment horizon of 90 days NEOS ETF Trust is expected to generate 1.36 times more return on investment than WisdomTree CBOE. However, NEOS ETF is 1.36 times more volatile than WisdomTree CBOE SP. It trades about 0.12 of its potential returns per unit of risk. WisdomTree CBOE SP is currently generating about 0.11 per unit of risk. If you would invest 1,642 in NEOS ETF Trust on August 24, 2024 and sell it today you would earn a total of 952.00 from holding NEOS ETF Trust or generate 57.98% 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. WisdomTree CBOE SP
Performance |
| Timeline |
| NEOS ETF Trust |
| WisdomTree CBOE SP |
NEOS ETF and WisdomTree CBOE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEOS ETF and WisdomTree CBOE
The main advantage of trading using opposite NEOS ETF and WisdomTree CBOE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEOS ETF position performs unexpectedly, WisdomTree CBOE 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 WisdomTree CBOE will offset losses from the drop in WisdomTree CBOE'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 |
| WisdomTree CBOE vs. Global X SP | WisdomTree CBOE vs. Global X Nasdaq | WisdomTree CBOE vs. First Trust BuyWrite | WisdomTree CBOE 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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