Correlation Between Silicon Laboratories and Semtech

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

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

Diversification Opportunities for Silicon Laboratories and Semtech

0.32

Correlation Coefficient

Silicon Laboratories  Semtech

Weak diversification

The 3 months correlation between Silicon and Semtech is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Laboratories and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and Silicon Laboratories 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 Silicon Laboratories are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Silicon Laboratories i.e., Silicon Laboratories and Semtech go up and down completely randomly.

Pair Corralation between Silicon Laboratories and Semtech

Given the investment horizon of 90 days Silicon Laboratories is expected to under-perform the Semtech. But the stock apears to be less risky and, when comparing its historical volatility, Silicon Laboratories is 1.27 times less risky than Semtech. The stock trades about -0.03 of its potential returns per unit of risk. The Semtech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,993  in Semtech on May 14, 2025 and sell it today you would earn a total of  863.00  from holding Semtech or generate 21.61% return on investment over 90 days.

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

Silicon Laboratories  vs.  Semtech

Silicon Laboratories

Risk-Adjusted Performance

Weakest

Over the last 90 days Silicon Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Silicon Laboratories is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Semtech

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicon Laboratories and Semtech

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

The idea behind Silicon Laboratories and Semtech 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.