Correlation Between American Century and JPMorgan International

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

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

Diversification Opportunities for American Century and JPMorgan International

-0.28

Correlation Coefficient

American Century  JPMorgan International

Very good diversification

The 3 months correlation between American and JPMorgan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and JPMorgan International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International and American Century 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 American Century ETF are associated (or correlated) with JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of American Century i.e., American Century and JPMorgan International go up and down completely randomly.

Pair Corralation between American Century and JPMorgan International

Considering the 90-day investment horizon American Century ETF is expected to generate 1.38 times more return on investment than JPMorgan International. However, American Century is 1.38 times more volatile than JPMorgan International Growth. It trades about 0.11 of its potential returns per unit of risk. JPMorgan International Growth is currently generating about 0.03 per unit of risk. If you would invest  6,011  in American Century ETF on October 24, 2024 and sell it today you would earn a total of  4,936  from holding American Century ETF or generate 82.12% return on investment over 90 days.

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

American Century ETF  vs.  JPMorgan International Growth

American Century ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Century ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, American Century reported solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with American Century and JPMorgan International

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

The idea behind American Century ETF and JPMorgan International Growth 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.