Correlation Between JP Morgan and American Century

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

By analyzing existing cross correlation between JP Morgan Exchange Traded and American Century Mid, you can compare the effects of market volatilities on JP Morgan and American Century 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 JP Morgan with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of JP Morgan and American Century.

Diversification Opportunities for JP Morgan and American Century

0.93

Correlation Coefficient

JP Morgan  American Century

Almost no diversification

The 3 months correlation between JCTR and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding JP Morgan Exchange Traded and American Century Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Mid and JP Morgan 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 JP Morgan Exchange Traded are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Mid has no effect on the direction of JP Morgan i.e., JP Morgan and American Century go up and down completely randomly.

Pair Corralation between JP Morgan and American Century

Given the investment horizon of 90 days JP Morgan is expected to generate 1.12 times less return on investment than American Century. But when comparing it to its historical volatility, JP Morgan Exchange Traded is 1.28 times less risky than American Century. It trades about 0.2 of its potential returns per unit of risk. American Century Mid is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,838  in American Century Mid on September 12, 2024 and sell it today you would earn a total of  591.00  from holding American Century Mid or generate 10.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

JP Morgan Exchange Traded  vs.  American Century Mid

JP Morgan Exchange

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JP Morgan Exchange Traded are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, JP Morgan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Century Mid

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Century Mid are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, American Century may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JP Morgan and American Century

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

The idea behind JP Morgan Exchange Traded and American Century Mid 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.