The ideal is not to dilute latex paint at all. Air driven sprayers have a great deal of difficulty with latex paints. Latex is more commonly applied with an airless sprayer which can apply unthinned paints at much higher rates without clogging.
I would suggest looking into a good airless sprayer. If you get your air drive sprayer to work with latex, post back your secret because I have not personally had much success with mine for latex paints.