Author Archives: Asingh

Top 30 US Equities Pairs : Trade of the Month January 2018

 

Lakeland Financial Corporation (LKFN) vs. WSFS Financial Corporation (WSFS)

Resulting Gross Profit of $494.63 in 14 calendar days on $10,000/leg.  That’s 4.9% on nominal leg value and approx. 25% return on CFD margin equity.

LKFN is a small bank holding company offering consumer banking and wealth management services to retail customers and is based in Warsaw, Indiana.  It specialises in real estate and agribusiness loans.  The company operates 49 branch offices in North and Central Indiana.

Closing Share Price (LKFN:NASDAQ) as of 29 January 2018: $48.42

LKFN Valuation Measures (Source: Yahoo! Finance)

Market Cap (intraday) 5 1.21B
Enterprise Value 3 1.22B
Trailing P/E 21.71
Forward P/E 1 15.32
PEG Ratio (5 yr expected) 1 1.64
Price/Sales (ttm) 7.17
Price/Book (mrq) 2.59
Enterprise Value/Revenue 3 7.20
Enterprise Value/EBITDA 6 N/A

 WSFS is a thrift holding company based in Wilmington, Delaware that offers similar services to consumers and specialises in real estate lending activities.  The company operates 77 branch offices, principally in Delaware and Pennsylvania.

Closing Share Price (WSFS:NASDAQ) as of 29 January 2018: $51.70

WSFS Valuation Measures (Source: Yahoo! Finance)

Market Cap (intraday) 5 1.62B
Enterprise Value 3 1.84B
Trailing P/E 28.10
Forward P/E 1 13.79
PEG Ratio (5 yr expected) 1 1.28
Price/Sales (ttm) 4.85
Price/Book (mrq) 2.21
Enterprise Value/Revenue 3 5.50
Enterprise Value/EBITDA 6 N/A

 Current Three-Year Backtest Using PairTrade Finder PRO Top 30 Settings:

9 trades in 3 years.  Avg. Correlation 80%, Cointegration 0.85, CAGR% 10.0%, Max DD % 6.94%, Percent of Winning Trades 100%, Avg. Net Profit per Trade $367.86.  Average Days in Trade 33 days.  Very smooth equity curve.  Good, non-trending ratio line.

LKFN/WSFS Relative Performance Last 12 Months

Entry Trade Signal EOD 9 January 2018 at +2.01 sd:

Short Leg: Sell Short 203 shares of LKFN at $49.13 = $9,974.41

Long Leg: Buy Long 209 shares of WSFS at $47.82 = $9,995.43

Check News:

LKFN – No fundamental value affecting news in the 10 days prior to the EOD 9 January 2018 Entry Signal.

WSFS – No fundamental value affecting news in the 10 days prior to the EOD 9 January 2018 Entry Signal.

Check Earnings Announcements & Dividends:

LKFN:

Earnings call in 15 days from Entry Trade Signal.

Next Dividend Date is 5 Feb 2018.

WSFS:

Earnings release within 13 days of Entry Signal.

Next dividend date 22 Feb 2018.     

Pair Charts Covering Trade Period:

 

No ratio breakout at time of Entry Signal, hitting a yearly max (good) but not way outside.

Non-trending ratio line for last 12 months with lots of back and forth (good).  Signal occurring near a 12 month resistance line.

Strong correlation for the last 90 days.

RSI of Ratio at time of trade call at 60. Not an extreme.

Recent Volatility for Position Sizing Purposes:

Average to low volatility over last 12 months (about 1.4%) and decreasing to current low volatility (0.94%).  Suggests a full position size.

 

RESULT OF TRADE

Exit Trade Signal after crossing 0.0 sd:

Short Leg: Buy to Close 203 shares of LKFN at $50.48, Gross Result = ($273.03)

Long Leg:  Sell to Close 209 shares of WSFS at $51.75, Gross Result = $820.32

Gross Result: $547.27, less commissions and slippage estimate and rounding errors of ($52.66) = $494.63

Resulting Gross Profit of $494.63 in 14 calendar days on $10,000/leg.  That’s 4.9% on nominal leg value and approx. 25% return on CFD margined equity.

NB: The Top 30 example equities pairs in PairTrade Finder PRO are provided for informational and educational purposes only and should not be construed as personalized investment advice. It should not be assumed that trading using the parameters demonstrated by the Software will be profitable and will not result in losses. Please see our full Terms & Disclaimer here.

© 2018 Event Driven Investor Ltd. (www.pairtradefinder.com)

 

Tips when Trading Commodity ETFs

ETFs have become highly sought after investments due to their prices. Real commodities are expensive and need inventory, while ETFs are cheaper and do not need physical storage.

Buying ETFs is easy as they can be purchased through a service broker or an online provider. Despite this, however, there are specific considerations that traders must keep in mind when trading commodity ETFs.

So, if you trade commodities, here are some expert tips for you to consider moving forward.

The volume that appears on the screen does not automatically equate to its liquidity

Unlike stocks and LICs, commodities are open-ended. This means that the units for trade can be redeemed or created by a fund manager. When more volume appears for a particular commodity, it doesn’t necessarily mean that the demand for it is high. That’s because an ETF is able to issue new units constantly as long as the assets are increasing.

Keep in mind limit orders

Use limit orders instead of market orders. Limit orders are much better in the sense that you are settled at your chosen price. You can check the status of your ETFs using INAV or “Indicative Net Asset Value”. Since market prices fluctuate throughout the day, INAV tends to change quickly as well. Any changes that you can see on the INAV also reflect on the bid price.

Volatile markets have big spreads. Therefore, your assets will most likely be placed at a wide spread. There are instances where big orders will settle at a different price from what is indicated on the INAV. So it is advisable to keep using limit orders in order to get your ideal price.

Check INAV before placing an order

As previously mentioned, you can check the status of your ETFs using the INAV. Those who issue ETFs give traders an indication of real-time net asset values. Because this calculation changes from time to time, the number calculated is referred to as the INAV. Remember to always check the INAV so you can see the estimated value of a commodity ETF during any given trading day.

Wait until the dust has settled

ETF prices are extremely volatile when the markets have just opened or when they are about to close. Therefore you should begin trading when the dust has settled. Wait 10 minutes after the markets have opened, and stop 10 minutes before they close.

Trading commodity ETFs are just like trading any other stock or forex. If you want to sharpen your skills, you can always use a dummy account. There are many platforms that provide dummy accounts that will give you an introduction into the world of trading online.  MetaTrader 4 on FXCM allows traders to access markets from around the world requiring very little capital to start. Like many other innovative trading platforms, MT4 is designed to give users the ability to gain insights before they plunge head first into serious trading. It’s resources like this that will help you transition seamlessly into the financial markets through making trades with small amounts of money, slowing working your way up the more confident you become.

Remember, before trading ETFs, check the fundamental factors that affect the market. Fear and inflation are variables that affect the prices of commodities.

 

Contact us to start your 30-day free trial of Pairtrade Finder software, the perfect software tool designed to help you easily and quickly find high probability securities pairs to trade.

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