Your watch list will act as your home screen where you can evaluate pairs that have back tested through the Pair Trade Finder system.  After you have gone through the process of finding pairs to evaluate, back testing them, and adding them to the system, your pairs will be viewable on your watch list. There are a few important issues you should consider when developing a portfolio of stock pairs to watch, which include the number of specific industry pairs you should monitor, single stock concentration and how to anticipate a signal.

After you have gone through the process of finding companies that are in similar industries,

… Read More →

The Pairtrade Finder analytic generated a signal to purchase TJX Companies and Sell/short Coach.  Both companies are in the retaill space.  Coach surged on better than expected earnings, but is likely to run into resistance after climbing nearly 10%, as sales missed expectations.  TJX is scheduled to release its financial results in 2-week.  The watchlist shows the levels to enter the trade, as the stretch reached 2.7 standard deviations above the 100-day moving average.

The backtest of the two stocks shows that over the past 3-years 8-signals were generated with a stretch of 2.7 standard deviations for an entry criteria,

… Read More →

The Pairtrade Finder analytic generated a signal to purchase BB&T Corp and Sell/short Citizens Financial Corp.  Both companies are in the financial space.  Both stocks were buoyed following better than expected earnings, although the CFG was definitely a larger surprize.  BB&T was upgraded and should recoup some of its recent losses versus CFG.  Both companies released their earning during the week ending the 21st.   The watchlist shows the levels to enter the trade, as the stretch reached 2.7 standard deviations below the 100-day moving average.

The backtest of the two stocks shows that over the past 3-years 4-signals were generated with a stretch of 2.7 standard deviations for an entry criteria,

… Read More →

Based on the last year of price history, it would seem there is quite a divergence between Target (orange) and Walmart (white) share prices (see Bloomberg chart below). The pairs look fairly correlated, and there is a large divergence, so should you expect a return to the mean, and short Walmart and go long Target?

Upon further consideration, this would be a dangerous trade to take.  First the y-axes are not synchonised and the prices have not been re-based to zero.

If one rebases the prices to zero (see below), then one can see that over the past year there is little correlation between the two pairs and that the divergence does not necessarily indicate any potential reversion to the mean.

… Read More →

The Pairtrade Finder analytic generated a signal to purchase Cliffs Natural Resources and Sell/short Still Water Mining Co. Both companies are in the mining and natural resources space. Infrastructure stocks, which include CLF are under pressure, as traders are concerned about the viability of Trumps legislative plans. CLF is scheduled to release earnings which are on April 27 and Still Water is schedule to provide financial results on May 5th, 2017. The is no stock specific news that is driving the pair lower. The watchlist shows the levels to enter the trade, as the stretch reached 2.7 standard deviations below the 100-day moving average. … Read More →