Correlation Between Dorman Products and Cooper Stnd

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

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

Diversification Opportunities for Dorman Products and Cooper Stnd

-0.08

Correlation Coefficient

Dorman Products  Cooper Stnd

Good diversification

The 3 months correlation between Dorman and Cooper is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dorman Products and Cooper Stnd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Stnd and Dorman Products 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 Dorman Products are associated (or correlated) with Cooper Stnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Stnd has no effect on the direction of Dorman Products i.e., Dorman Products and Cooper Stnd go up and down completely randomly.

Pair Corralation between Dorman Products and Cooper Stnd

Given the investment horizon of 90 days Dorman Products is expected to generate 0.37 times more return on investment than Cooper Stnd. However, Dorman Products is 2.73 times less risky than Cooper Stnd. It trades about 0.02 of its potential returns per unit of risk. Cooper Stnd is currently generating about -0.28 per unit of risk. If you would invest  9,218  in Dorman Products on February 11, 2024 and sell it today you would earn a total of  26.00  from holding Dorman Products or generate 0.28% return on investment over 90 days.

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

Dorman Products  vs.  Cooper Stnd

Dorman Products

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dorman Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Dorman Products may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Cooper Stnd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cooper Stnd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Dorman Products and Cooper Stnd

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

The idea behind Dorman Products and Cooper Stnd 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.