If you're planning on pair trading, it's important that you have at least a general understanding of the statistics that are used. This article gives an overview of some of the key statistics used in pair trading and what to look for when analyzing them.
Tag archives: Cointegration
Understanding the difference between correlation and cointegration is critical if you intend to pair trade stocks. Not knowing the difference is a sure fire way to mount up losses in your account.
The two stock market ETF's $EWC (Canada) and $EWA (Australia) are a well known pair often used in pair trading. The 60 day stress indicator of this pair is currently at its most extreme level since November last year and is therefore worth keeping an eye on.