Market Measures

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Guide to Pairs Trading Stock Indexes

Market Measures

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Stock Indexes present some of the highest positive correlations of any markets. However, the contrast in their holdings can cause them to move at different paces or even in different directions at times.

These divergences can present opportunity for pairs trades, but when is it a good time to get in?


Upon observing movement in SPY, IWM, QQQ and DIA for 1 month, the Research Team noted the standard deviation of pairing these indexes against one another to determine optimal trade entry.

Tune in to discover if waiting for divergence is key or if we can simply buy the weakest ETF and sell the strongest ETF at any given time!

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