Correlation Between Silicon Laboratories and Lattice Semiconductor
Can any of the company-specific risk be diversified away by investing in both Silicon Laboratories 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 Silicon Laboratories and Lattice Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Laboratories and Lattice Semiconductor, you can compare the effects of market volatilities on Silicon Laboratories 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 Silicon Laboratories with a short position of Lattice Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Laboratories and Lattice Semiconductor.
Diversification Opportunities for Silicon Laboratories and Lattice Semiconductor
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Silicon and Lattice is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and Silicon Laboratories 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 Silicon Laboratories 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 Silicon Laboratories i.e., Silicon Laboratories and Lattice Semiconductor go up and down completely randomly.
Pair Corralation between Silicon Laboratories and Lattice Semiconductor
Given the investment horizon of 90 days Silicon Laboratories is expected to generate 0.61 times more return on investment than Lattice Semiconductor. However, Silicon Laboratories is 1.63 times less risky than Lattice Semiconductor. It trades about 0.26 of its potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.09 per unit of risk. If you would invest 11,426 in Silicon Laboratories on February 24, 2024 and sell it today you would earn a total of 1,385 from holding Silicon Laboratories or generate 12.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Silicon Laboratories vs. Lattice Semiconductor
Performance |
Timeline |
Silicon Laboratories |
Lattice Semiconductor |
Silicon Laboratories and Lattice Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Silicon Laboratories and Lattice Semiconductor
The main advantage of trading using opposite Silicon Laboratories and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Laboratories 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.Silicon Laboratories vs. Diodes Incorporated | Silicon Laboratories vs. MACOM Technology Solutions | Silicon Laboratories vs. FormFactor | Silicon Laboratories vs. Amkor Technology |
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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 .
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