Correlation Between Eastman Chemical and NewMarket

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

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

Diversification Opportunities for Eastman Chemical and NewMarket

-0.13

Correlation Coefficient

Eastman Chemical  NewMarket

Good diversification

The 3 months correlation between Eastman and NewMarket is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and NewMarket go up and down completely randomly.

Pair Corralation between Eastman Chemical and NewMarket

Considering the 90-day investment horizon Eastman Chemical is expected to under-perform the NewMarket. In addition to that, Eastman Chemical is 2.57 times more volatile than NewMarket. It trades about -0.08 of its total potential returns per unit of risk. NewMarket is currently generating about 0.17 per unit of volatility. If you would invest  62,567  in NewMarket on May 7, 2025 and sell it today you would earn a total of  8,314  from holding NewMarket or generate 13.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eastman Chemical  vs.  NewMarket

Eastman Chemical

Risk-Adjusted Performance

Weakest

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

NewMarket

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NewMarket are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, NewMarket unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastman Chemical and NewMarket

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

The idea behind Eastman Chemical and NewMarket 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..