Pair Trading Strategy

[cmphil 10]

I don't know how many of you are familiar with pair trading, but I really like to trade using this strategy, especially with the market being so volatile.

 

Does anyone here pair trade? One pair I'm looking at now is BAC - WFC

[natedredd10 10]

It doesn't make sense to me from this level. You are ultimately capping your biggest wins doing some kind of arbitrage. You will ultimately have to take on irrational levels of leverage or build a strategy/equity curve/structure/sharpe to leverage OPM to make up for that IMO.

A few years ago in the trader mag 30 under 30 there was this guy that would come into the bank, use stat arb models as indicators then take a directional position on one leg, then go back on vacation.

Rather unexplored territory at this level(any level?) that would probably be worth it to look into vs some kind of actual stat arb. You probably have almost infinite liquidity no reason to give that up employing strategies that you can shove extra liquidity into when you don't need it.

[SIUYA 11]

pairs trading = double the risk with half the profit.