Correlation Between Smith Midland and Boise Cascad

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

By analyzing existing cross correlation between Smith Midland Corp and Boise Cascad Llc, you can compare the effects of market volatilities on Smith Midland and Boise Cascad 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 Smith Midland with a short position of Boise Cascad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Midland and Boise Cascad.

Diversification Opportunities for Smith Midland and Boise Cascad

0.11

Correlation Coefficient

Smith Midland  Boise Cascad

Average diversification

The 3 months correlation between Smith and Boise is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Smith Midland Corp and Boise Cascad Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascad Llc and Smith Midland 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 Smith Midland Corp are associated (or correlated) with Boise Cascad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascad Llc has no effect on the direction of Smith Midland i.e., Smith Midland and Boise Cascad go up and down completely randomly.

Pair Corralation between Smith Midland and Boise Cascad

Given the investment horizon of 90 days Smith Midland Corp is expected to generate 1.44 times more return on investment than Boise Cascad. However, Smith Midland is 1.44 times more volatile than Boise Cascad Llc. It trades about 0.11 of its potential returns per unit of risk. Boise Cascad Llc is currently generating about 0.01 per unit of risk. If you would invest  3,066  in Smith Midland Corp on May 7, 2025 and sell it today you would earn a total of  625.00  from holding Smith Midland Corp or generate 20.38% return on investment over 90 days.

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

Smith Midland Corp  vs.  Boise Cascad Llc

Smith Midland Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Midland Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, Smith Midland exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boise Cascad Llc

Risk-Adjusted Performance

Weakest

Over the last 90 days Boise Cascad Llc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Boise Cascad is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Smith Midland and Boise Cascad

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

The idea behind Smith Midland Corp and Boise Cascad Llc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.