Correlation Between Lattice Semiconductor and Valens

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

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

Diversification Opportunities for Lattice Semiconductor and Valens

-0.35

Correlation Coefficient

Lattice Semiconductor  Valens

Very good diversification

The 3 months correlation between Lattice and Valens is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and Valens go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and Valens

Given the investment horizon of 90 days Lattice Semiconductor is expected to under-perform the Valens. In addition to that, Lattice Semiconductor is 2.56 times more volatile than Valens. It trades about -0.12 of its total potential returns per unit of risk. Valens is currently generating about -0.02 per unit of volatility. If you would invest  248.00  in Valens on February 11, 2024 and sell it today you would lose (2.00) from holding Valens or give up 0.81% of portfolio value over 90 days.

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

Lattice Semiconductor  vs.  Valens

Lattice Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lattice Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lattice Semiconductor is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Valens

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Valens is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lattice Semiconductor and Valens

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

The idea behind Lattice Semiconductor and Valens 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.