Correlation Between Lattice Semiconductor and SunPower
Can any of the company-specific risk be diversified away by investing in both Lattice Semiconductor and SunPower 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 SunPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lattice Semiconductor and SunPower, you can compare the effects of market volatilities on Lattice Semiconductor and SunPower 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 SunPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lattice Semiconductor and SunPower.
Diversification Opportunities for Lattice Semiconductor and SunPower
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lattice and SunPower is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and SunPower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunPower 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 SunPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunPower has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and SunPower go up and down completely randomly.
Pair Corralation between Lattice Semiconductor and SunPower
Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 0.49 times more return on investment than SunPower. However, Lattice Semiconductor is 2.06 times less risky than SunPower. It trades about -0.26 of its potential returns per unit of risk. SunPower is currently generating about -0.23 per unit of risk. If you would invest 7,859 in Lattice Semiconductor on January 25, 2024 and sell it today you would lose (1,062) from holding Lattice Semiconductor or give up 13.51% 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. SunPower
Performance |
| Timeline |
| Lattice Semiconductor |
| SunPower |
Lattice Semiconductor and SunPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lattice Semiconductor and SunPower
The main advantage of trading using opposite Lattice Semiconductor and SunPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lattice Semiconductor position performs unexpectedly, SunPower 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 SunPower will offset losses from the drop in SunPower's long position.The idea behind Lattice Semiconductor and SunPower 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 Stocks Directory module to find actively traded stocks across global markets.
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