Correlation Between Lattice Semiconductor and Synaptics Incorporated

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

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

Diversification Opportunities for Lattice Semiconductor and Synaptics Incorporated

0.29

Correlation Coefficient

Lattice Semiconductor  Synaptics Incorporated

Modest diversification

The 3 months correlation between Lattice and Synaptics is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and Synaptics Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synaptics Incorporated 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 Synaptics Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synaptics Incorporated has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and Synaptics Incorporated go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and Synaptics Incorporated

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 1.09 times more return on investment than Synaptics Incorporated. However, Lattice Semiconductor is 1.09 times more volatile than Synaptics Incorporated. It trades about 0.16 of its potential returns per unit of risk. Synaptics Incorporated is currently generating about 0.07 per unit of risk. If you would invest  4,305  in Lattice Semiconductor on September 2, 2024 and sell it today you would earn a total of  1,370  from holding Lattice Semiconductor or generate 31.82% return on investment over 90 days.

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

Lattice Semiconductor  vs.  Synaptics Incorporated

Lattice Semiconductor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Lattice Semiconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Synaptics Incorporated

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Synaptics Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Synaptics Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lattice Semiconductor and Synaptics Incorporated

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

The idea behind Lattice Semiconductor and Synaptics Incorporated 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 Global Correlations module to find global opportunities by holding instruments from different markets.