Correlation Between NewMarket and Chase

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

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

Diversification Opportunities for NewMarket and Chase

-0.63

Correlation Coefficient

NewMarket  Chase

Excellent diversification

The 3 months correlation between NewMarket and Chase is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding NewMarket and Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase and NewMarket 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 NewMarket are associated (or correlated) with Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase has no effect on the direction of NewMarket i.e., NewMarket and Chase go up and down completely randomly.

Pair Corralation between NewMarket and Chase

If you would invest  53,759  in NewMarket on August 30, 2024 and sell it today you would earn a total of  338.00  from holding NewMarket or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.35%
Values	Daily Returns

NewMarket  vs.  Chase

NewMarket

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NewMarket has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, NewMarket is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Chase

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Chase is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NewMarket and Chase

The main advantage of trading using opposite NewMarket and Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewMarket position performs unexpectedly, Chase 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 Chase will offset losses from the drop in Chase's long position.

The idea behind NewMarket and Chase 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.