Correlation Between Rambus and Lattice Semiconductor

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

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

Diversification Opportunities for Rambus and Lattice Semiconductor

0.75

Correlation Coefficient

Rambus  Lattice Semiconductor

Poor diversification

The 3 months correlation between Rambus and Lattice is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Rambus Inc and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and Rambus 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 Rambus Inc 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 Rambus i.e., Rambus and Lattice Semiconductor go up and down completely randomly.

Pair Corralation between Rambus and Lattice Semiconductor

Given the investment horizon of 90 days Rambus Inc is expected to generate 0.84 times more return on investment than Lattice Semiconductor. However, Rambus Inc is 1.18 times less risky than Lattice Semiconductor. It trades about 0.18 of its potential returns per unit of risk. Lattice Semiconductor is currently generating about 0.13 per unit of risk. If you would invest  5,565  in Rambus Inc on May 20, 2025 and sell it today you would earn a total of  1,857  from holding Rambus Inc or generate 33.37% return on investment over 90 days.

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

Rambus Inc  vs.  Lattice Semiconductor

Rambus Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rambus Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Rambus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lattice Semiconductor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 10 (%) 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 Rambus and Lattice Semiconductor

The main advantage of trading using opposite Rambus and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rambus 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 Rambus Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.