Correlation Between DICKER DATA and Covenant Logistics

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

By analyzing existing cross correlation between DICKER DATA LTD and Covenant Logistics Group, you can compare the effects of market volatilities on DICKER DATA and Covenant Logistics 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 DICKER DATA with a short position of Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DICKER DATA and Covenant Logistics.

Diversification Opportunities for DICKER DATA and Covenant Logistics

-0.16

Correlation Coefficient

DICKER DATA  Covenant Logistics

Good diversification

The 3 months correlation between DICKER and Covenant is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding DICKER DATA LTD and Covenant Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics and DICKER DATA 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 DICKER DATA LTD are associated (or correlated) with Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics has no effect on the direction of DICKER DATA i.e., DICKER DATA and Covenant Logistics go up and down completely randomly.

Pair Corralation between DICKER DATA and Covenant Logistics

Assuming the 90 days horizon DICKER DATA LTD is expected to generate 0.13 times more return on investment than Covenant Logistics. However, DICKER DATA LTD is 7.75 times less risky than Covenant Logistics. It trades about -0.1 of its potential returns per unit of risk. Covenant Logistics Group is currently generating about -0.28 per unit of risk. If you would invest  515.00  in DICKER DATA LTD on October 4, 2024 and sell it today you would lose (15.00) from holding DICKER DATA LTD or give up 2.91% of portfolio value over 90 days.

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

DICKER DATA LTD  vs.  Covenant Logistics Group

DICKER DATA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKER DATA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Covenant Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covenant Logistics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DICKER DATA and Covenant Logistics

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

The idea behind DICKER DATA LTD and Covenant Logistics Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.