Pairs Trading

I know someone who runs a hedge fund, he has a system where he looks at about 6000 pairs. Pairs that at first glance don't look too similar ( COF with an Insurance Co.), but he did surprisingly well. He used a standard deviation of the spread.

 

So you would not buy/short simultaneously? I remember reading somewhere that you said your strategy is intraday. How long do you usually hold your positions?

 

GOOG market capitalization just surpassed INTC market cap. Maybe this suggests a Pairs Trade to somebody?

 

In hindsight, this was a half decent recommendation. Look at the chart on 1/27/2006

 

why did you overlay it with msft? i wouldn't think intc or msft would make a good pair for google at all.

 

just clicked on the link you posted...but it is not working...it is just me or something wrong with the site?

 

shoot, that site was working well like 2 weeks ago. it was a pretty good site too.

 

Check out MRK/DNA, they seem to have a nice mirroring effect and a smooth RS graph

 

last 2 months r[DNA, MRK]= -.73
Oct/Nov 05 r=+.96
Aug/Sept 05 r=+.70

 

Anyone trade the Russell 2000 vs SP500 as a pair?