Correlation Between Analog Devices and Lattice Semiconductor

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

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

Diversification Opportunities for Analog Devices and Lattice Semiconductor

0.72

Correlation Coefficient

Analog Devices  Lattice Semiconductor

Poor diversification

The 3 months correlation between Analog and Lattice is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and Analog Devices 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 Analog Devices 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 Analog Devices i.e., Analog Devices and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between Analog Devices and Lattice Semiconductor

Considering the 90-day investment horizon Analog Devices is expected to generate 0.53 times more return on investment than Lattice Semiconductor. However, Analog Devices is 1.89 times less risky than Lattice Semiconductor. It trades about 0.29 of its potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.13 per unit of risk. If you would invest  17,420  in Analog Devices on April 20, 2025 and sell it today you would earn a total of  6,765  from holding Analog Devices or generate 38.83% return on investment over 90 days.

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

Analog Devices  vs.  Lattice Semiconductor

Analog Devices

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Analog Devices demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lattice Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 9 (%) 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 Analog Devices and Lattice Semiconductor

The main advantage of trading using opposite Analog Devices and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices 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 Analog Devices 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.