Correlation Between Lattice Semiconductor and Cirrus Logic

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

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

Diversification Opportunities for Lattice Semiconductor and Cirrus Logic

-0.6

Correlation Coefficient

Lattice Semiconductor  Cirrus Logic

Excellent diversification

The 3 months correlation between Lattice and Cirrus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and Cirrus Logic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirrus Logic 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 Cirrus Logic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirrus Logic has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and Cirrus Logic go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and Cirrus Logic

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 1.36 times more return on investment than Cirrus Logic. However, Lattice Semiconductor is 1.36 times more volatile than Cirrus Logic. It trades about 0.15 of its potential returns per unit of risk. Cirrus Logic is currently generating about -0.17 per unit of risk. If you would invest  4,305  in Lattice Semiconductor on August 31, 2024 and sell it today you would earn a total of  1,327  from holding Lattice Semiconductor or generate 30.82% return on investment over 90 days.

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

Lattice Semiconductor  vs.  Cirrus Logic

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.

Cirrus Logic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirrus Logic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lattice Semiconductor and Cirrus Logic

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

The idea behind Lattice Semiconductor and Cirrus Logic 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..