Correlation Between American Century and JPMorgan Climate

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

By analyzing existing cross correlation between American Century Mid and JPMorgan Climate Change, you can compare the effects of market volatilities on American Century and JPMorgan Climate 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 Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and JPMorgan Climate.

Diversification Opportunities for American Century and JPMorgan Climate

0.8

Correlation Coefficient

American Century  JPMorgan Climate

Very poor diversification

The 3 months correlation between American and JPMorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Century Mid and JPMorgan Climate Change in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Climate Change 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 Mid are associated (or correlated) with JPMorgan Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Climate Change has no effect on the direction of American Century i.e., American Century and JPMorgan Climate go up and down completely randomly.

Pair Corralation between American Century and JPMorgan Climate

Considering the 90-day investment horizon American Century Mid is expected to under-perform the JPMorgan Climate. In addition to that, American Century is 1.25 times more volatile than JPMorgan Climate Change. It trades about -0.07 of its total potential returns per unit of risk. JPMorgan Climate Change is currently generating about -0.03 per unit of volatility. If you would invest  4,375  in JPMorgan Climate Change on December 29, 2024 and sell it today you would lose (102.00) from holding JPMorgan Climate Change or give up 2.33% of portfolio value over 90 days.

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

American Century Mid  vs.  JPMorgan Climate Change

American Century Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Century Mid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, American Century is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

JPMorgan Climate Change

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Climate Change has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, JPMorgan Climate is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with American Century and JPMorgan Climate

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

The idea behind American Century Mid and JPMorgan Climate Change 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.