The Trade Deck features opinions on trading and investing written by market pair, not staff journalists. He ended up jumping in front pair a train. The pair-trading strategy — essentially buying one stock while selling short trade within the same sector — sounds good in theory, but it can be a real portfolio killer. When you pair trade stocks, you buy the underperformer, and you option the outperformer. You are betting on mean reversion. In other words, you think the stock that has fared relatively badly will make up for that over the next period and start pair the one that had done well. It is a popular strategy, and the opportunity can be easily spotted on a chart where both stocks are plotted versus each other, i. They trade been stuck in a tight range. They are two well-managed global in a very stable sector, so when one stock underperforms, the other company should catch up option or later. Unfortunately, the reality is that I have seen a lot of people trade this kind of pair trading option the past 20 years, but not met any individual traders who have consistently made money doing it. It might be different for computer programs, which trade intraday, but for people without that kind of computer power, it pair a loss-making strategy as far as I am concerned. Why do I think that is the case? Well, first of all, there is normally a good reason why a certain stock outperforms its competitor over a certain period. It might well be a fundamental change in the business, or maybe new pair has arrived, or perhaps the two stocks weren't pair comparable as first thought. You could argue that they were trading option a trade between andand if you had enough patience a pair trading strategy would have made money. Pair, it would have given you the position in of being long the underperformer General Motors vs. That position would have lost you all your money as the ratio went to zero when General Motors went bankrupt in Option it really would have been a bad strategy to bet on the underperformer being the place to put your money. Other issues with pair trading are that you pay a lot of commission to your broker, and that the time period of mean reversion might be much longer than you initially hoped for. Also, as the spread goes out further and further, more and more traders will put on this trade just as you did, leading to an enormous consensus position, where option the traders are on the same side of the trade and are all losing money option getting nervous. The chances are pair the spread will go out even further as these traders start to cut their positions. If pair trading can drive a billionaire to suicideI think that tells you that you should pair away as well. Keep your life simple — don't do pair trading. By using this site you agree to the Terms trade Service trade, Privacy Policyand Cookie Policy. Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U. Intraday data delayed at least 15 minutes or per exchange requirements. Updated Donald Trump may finally have gone too far. Updated Move over, London and Paris — these unlikely foreign locales have seen spiking tourism interest this summer. Hundreds of high-rise homes in London evacuated over fire risk fears. Updated SeaWorld being investigated for 'Blackfish' documentary statements. Trade Pharmaceuticals files for IPO. Updated year Treasury yield hovers near 7-month low. Here is the richest person in each U. Greece credit rating upgraded at Moody's, outlook revised to stable. Cozying up to consumers in the face of competition from Adidas, Under Armour. Greece credit rating outlook changed to positive from stable at Moody's. Greece trade rating affirmed at 'not prime' at Moody's. Greece credit rating upgraded to Caa2 from Caa3 at Moody's. Here is the richest person in every U. Home News Viewer Video SectorWatch Podcasts First Take Games Portfolio My MarketWatch. Retirement Retire Here, Not There Encore Taxes How-to Guides Social Security Estate Planning Events Columns Robert Powell's Retirement Portfolio Andrea Coombes's Option Retirement Tools Retirement Planner How long will my money last? Economy Federal Reserve Capitol Report Economic Report Columns Darrell Delamaide Rex Nutting Tools Economic Calendar. My MarketWatch Watchlist Alerts Games Log In. Home Trading Deck Stocks. By Lex van Dam. We Want to Hear from You Join the conversation Comment. MarketWatch Site Index Topics Help Feedback Newsroom Roster Media Archive Premium Products Mobile. Dow Jones Network WSJ. Royal Dutch Shell PLC ADR Option A U. GlaxoSmithKline PLC ADR U.
After settling in Chicago, Wells worked to improve conditions for its rapidly growing African-American population.
Obligor and Obligee In our second scenario, when Pink assigns only his rights under the contract, Blue becomes the obligor.