What is Pair Trading?

Date: August 14, 2017

“Pair trading”, a market neutral strategy (meaning that the direction of the overall market does not matter), can help reduce portfolio volatility and improve money-making opportunities in volatile markets. Developed in the mid-1980s by quantitative analysts (quants), the strategy involves selecting two highly correlated stocks and then matching a long position in one of the two stocks with a short position in the other.

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