I must admit that a sylveon waving its ribbons can mean a number of different things, depending on the circumstances. It’s very much an analog to the act of an eevee wagging its tail. In most circumstances, ribbon waves are simply an expression of excitement—particularly excitement over seeing a potential playmate or friend. However, if paired with signs of stress, ribbon waving can be an intimidation tactic or a sign that the sylveon is afraid or provoked.
The easiest way to tell these two ends of the emotional spectrum apart from a distance is simply by looking at the height at which the sylveon is waving its ribbons. If the ribbons don’t rise above its ears, if they seem loose, and/or if the sylveon is waving its ribbons’ entire length, then the sylveon in question is relaxed, and the waving is a sign of excitement and eagerness to play. If, however, the ribbons rise above its ears, and only the tips seem to move, then the sylveon is attempting to make itself look bigger while telling your hydreigon to keep her distance.
Either way, it may be a good idea to meet with your new neighbor and explain the situation. Your neighbor will know best how to train their sylveon to stay away from your yard, and in any case, it’s very possible that this neighbor isn’t aware that their sylveon is escaping at all. Bringing this to their attention, as awkward as that may be for a first meeting, allows them to address the issue from their end and do what’s best to keep their sylveon safe.
That having been said, if this sylveon is trying to make a new friend, then this may be a good time for you to befriend your new neighbor and talk about how best to introduce the two in a more comfortable setting. At the same time, make it clear to your hydreigon that your sylveon means no harm. (Your neighbor may be able to help you with this.) Of course, you’ll also want to let your neighbor know in as polite a way as possible that their sylveon is wandering into your hydreigon’s space. Consider suggesting other places for your neighbor to let their sylveon roam, such as a nearby park, to give them both options.
If, however, this is a threat display, notifying your neighbor (again, in a polite manner) might help prevent a confrontation between both of your pokémon. Additionally, consider reinforcing the boundaries of your property with a fence, or adopt a hardy poison-type that would get along well with your hydreigon (such as a member of the salandit or ekans lines) to act as a bodyguard of sorts.
Another idea that you could try is addressing why this sylveon is coming into your yard. Something about your property may seem enticing to it, be it a bit of shade or a berry bush. Removing these things will make your yard less enticing to your neighbor’s sylveon and encourage it to go home. Likewise, it may be a good idea to cover up its scent (as it may have marked its territory), which you can do by spraying repel on the areas where this sylveon seems to rest the most. Spraying repel around the boundaries of your property or planting thorny bushes that a sylveon can’t push through may also help keep this sylveon away (although your hydreigon might find it just as irritating).
In short, there are a number of things you can do, anonymous, although it would likely be best to start by contacting your neighbor in a calm, non-confrontational manner.
Best of luck!