Correlation Between Lattice Semiconductor and Semtech

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

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

Diversification Opportunities for Lattice Semiconductor and Semtech

-0.5

Correlation Coefficient

Lattice Semiconductor  Semtech

Very good diversification

The 3 months correlation between Lattice and Semtech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and Lattice Semiconductor 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 Lattice Semiconductor are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and Semtech go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and Semtech

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 0.41 times more return on investment than Semtech. However, Lattice Semiconductor is 2.42 times less risky than Semtech. It trades about 0.05 of its potential returns per unit of risk. Semtech is currently generating about -0.09 per unit of risk. If you would invest  5,833  in Lattice Semiconductor on December 1, 2024 and sell it today you would earn a total of  401.00  from holding Lattice Semiconductor or generate 6.87% return on investment over 90 days.

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

Lattice Semiconductor  vs.  Semtech

Lattice Semiconductor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Lattice Semiconductor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Semtech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semtech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lattice Semiconductor and Semtech

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

The idea behind Lattice Semiconductor and Semtech 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .