Covariance of random stock prices in the Stochastic Dividend Discount   Model
  Dividend discount models have been developed in a deterministic setting. Some authors (Hurley and Johnson, 1994 and 1998; Yao, 1997) have introduced randomness in terms of stochastic growth rates, delivering closed-form expressions for the expected value of stock prices. This paper extends such previous results by determining a formula for the covariance between random stock prices when the dividends' rates of growth are correlated. The formula is eventually applied to real market data. 
Arianna Agosto, Alessandra Mainini, Enrico Moretto
q-fin.PR