Correlation Between Lattice Semiconductor and NXP Semiconductors

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

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

Diversification Opportunities for Lattice Semiconductor and NXP Semiconductors

0.62

Correlation Coefficient

Lattice Semiconductor  NXP Semiconductors

Poor diversification

The 3 months correlation between Lattice and NXP is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lattice Semiconductor and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors 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 NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Lattice Semiconductor i.e., Lattice Semiconductor and NXP Semiconductors go up and down completely randomly.

Pair Corralation between Lattice Semiconductor and NXP Semiconductors

Assuming the 90 days horizon Lattice Semiconductor is expected to generate 1.26 times less return on investment than NXP Semiconductors. In addition to that, Lattice Semiconductor is 1.82 times more volatile than NXP Semiconductors NV. It trades about 0.08 of its total potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.18 per unit of volatility. If you would invest  14,930  in NXP Semiconductors NV on April 21, 2025 and sell it today you would earn a total of  4,370  from holding NXP Semiconductors NV or generate 29.27% return on investment over 90 days.

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

Lattice Semiconductor  vs.  NXP Semiconductors NV

Lattice Semiconductor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lattice Semiconductor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lattice Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

NXP Semiconductors

Risk-Adjusted Performance

Good

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

Pair Trading with Lattice Semiconductor and NXP Semiconductors

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

The idea behind Lattice Semiconductor and NXP Semiconductors NV 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.