Correlation Between Global X and NEOS ETF

Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and NEOS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Russell and NEOS ETF Trust, you can compare the effects of market volatilities on Global X 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 Global X with a short position of NEOS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and NEOS ETF.

Diversification Opportunities for Global X and NEOS ETF

-0.43

Correlation Coefficient

Global X  NEOS ETF

Very good diversification

The 3 months correlation between Global and NEOS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global X Russell 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 Global X 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 Global X Russell 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 Global X i.e., Global X and NEOS ETF go up and down completely randomly.

Pair Corralation between Global X and NEOS ETF

Given the investment horizon of 90 days Global X Russell is expected to under-perform the NEOS ETF. But the etf apears to be less risky and, when comparing its historical volatility, Global X Russell is 8.37 times less risky than NEOS ETF. The etf trades about -0.11 of its potential returns per unit of risk. The NEOS ETF Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,573  in NEOS ETF Trust on January 11, 2025 and sell it today you would earn a total of  2,425  from holding NEOS ETF Trust or generate 94.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.81%
Values	Daily Returns

Global X Russell  vs.  NEOS ETF Trust

Global X Russell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Russell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

NEOS ETF Trust

Risk-Adjusted Performance

Good

Over the last 90 days NEOS ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unsteady basic indicators, NEOS ETF demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and NEOS ETF

The main advantage of trading using opposite Global X and NEOS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.

The idea behind Global X Russell and NEOS ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.