Correlation Between Cirrus Logic and Lattice Semiconductor

Can any of the company-specific risk be diversified away by investing in both Cirrus Logic and Lattice Semiconductor 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 Cirrus Logic and Lattice Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cirrus Logic and Lattice Semiconductor

-0.52

Correlation Coefficient

Cirrus Logic  Lattice Semiconductor

Excellent diversification

The 3 months correlation between Cirrus and Lattice is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cirrus Logic and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and Cirrus Logic 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 Cirrus Logic are associated (or correlated) with Lattice Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lattice Semiconductor has no effect on the direction of Cirrus Logic i.e., Cirrus Logic and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between Cirrus Logic and Lattice Semiconductor

Given the investment horizon of 90 days Cirrus Logic is expected to under-perform the Lattice Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Cirrus Logic is 1.42 times less risky than Lattice Semiconductor. The stock trades about -0.16 of its potential returns per unit of risk. The Lattice Semiconductor is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,344  in Lattice Semiconductor on September 12, 2024 and sell it today you would earn a total of  1,604  from holding Lattice Semiconductor or generate 36.92% return on investment over 90 days.

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

Cirrus Logic  vs.  Lattice Semiconductor

Cirrus Logic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirrus Logic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lattice Semiconductor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Lattice Semiconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cirrus Logic and Lattice Semiconductor

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

The idea behind Cirrus Logic and Lattice Semiconductor 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.