Correlation Between Intel and Lattice Semiconductor

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

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

Diversification Opportunities for Intel and Lattice Semiconductor

0.76

Correlation Coefficient

Intel  Lattice Semiconductor

Poor diversification

The 3 months correlation between Intel and Lattice is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and Intel 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 Intel 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 Intel i.e., Intel and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between Intel and Lattice Semiconductor

Given the investment horizon of 90 days Intel is expected to generate 3.17 times less return on investment than Lattice Semiconductor. But when comparing it to its historical volatility, Intel is 1.02 times less risky than Lattice Semiconductor. It trades about 0.02 of its potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,307  in Lattice Semiconductor on August 31, 2024 and sell it today you would earn a total of  325.00  from holding Lattice Semiconductor or generate 6.12% return on investment over 90 days.

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

Intel  vs.  Lattice Semiconductor

Intel

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lattice Semiconductor

Risk-Adjusted Performance

12 of 100

OK

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 unfluctuating fundamental indicators, Lattice Semiconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Lattice Semiconductor

The main advantage of trading using opposite Intel and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.