Correlation Between IPG Photonics and Lattice Semiconductor
Can any of the company-specific risk be diversified away by investing in both IPG Photonics 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 IPG Photonics and Lattice Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Lattice Semiconductor, you can compare the effects of market volatilities on IPG Photonics 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 IPG Photonics with a short position of Lattice Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Lattice Semiconductor.
Diversification Opportunities for IPG Photonics and Lattice Semiconductor
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Lattice is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Lattice Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lattice Semiconductor and IPG Photonics 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 IPG Photonics 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 IPG Photonics i.e., IPG Photonics and Lattice Semiconductor go up and down completely randomly.
Pair Corralation between IPG Photonics and Lattice Semiconductor
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Lattice Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.4 times less risky than Lattice Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Lattice Semiconductor is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 8,115 in Lattice Semiconductor on August 31, 2024 and sell it today you would lose (2,440) from holding Lattice Semiconductor or give up 30.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Lattice Semiconductor
Performance |
| Timeline |
| IPG Photonics |
| Lattice Semiconductor |
IPG Photonics and Lattice Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Lattice Semiconductor
The main advantage of trading using opposite IPG Photonics and Lattice Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics 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.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Lattice Semiconductor vs. Qorvo Inc | Lattice Semiconductor vs. Sitime | Lattice Semiconductor vs. Microchip Technology | Lattice Semiconductor vs. Silicon Laboratories |
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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