Sample strategy #6 – Pairs Trading with Country ETFs
Pairs trading (sometimes known as statistical arbitrage) is a very popular trading strategy between traders. It has also become a favorite strategy for investigation by financial academics. The most well-known variant is stock's pairs trading where a trader buys and simultaneously sells two correlated stocks when they diverge from their normal synchronized moves. The equity universe is broad and therefore it is time-consuming to look for pairs which are correlated or cointegrated (aka. they move together). But isn't there some simple version of this strategy?