Correlation Between Lattice Semiconductor and Groupon

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

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

Diversification Opportunities for Lattice Semiconductor and Groupon

0.34

Correlation Coefficient

Lattice Semiconductor  Groupon

Weak diversification

The 3 months correlation between Lattice and Groupon is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon 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 Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and Groupon go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and Groupon

Given the investment horizon of 90 days Lattice Semiconductor is expected to generate 0.49 times more return on investment than Groupon. However, Lattice Semiconductor is 2.03 times less risky than Groupon. It trades about 0.04 of its potential returns per unit of risk. Groupon is currently generating about 0.02 per unit of risk. If you would invest  4,785  in Lattice Semiconductor on January 26, 2024 and sell it today you would earn a total of  2,373  from holding Lattice Semiconductor or generate 49.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Lattice Semiconductor  vs.  Groupon

Lattice Semiconductor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 7 (%) 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.

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lattice Semiconductor and Groupon

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

The idea behind Lattice Semiconductor and Groupon 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.