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Does simple pairs trading still work?

  • Binh Do
  • , Robert Faff

    Research output: Contribution to journalArticlepeer-review

    163 Citations (Scopus)

    Abstract

    Despite confirming the continuing downward trend in profitability of pairs trading, this study found that the strategy performs strongly during periods of prolonged turbulence, including the recent global financial crisis. Moreover, alternative algorithms combined with other measures enhance trading profits considerably, by 22 bps a month for bank stocks.
    Original languageEnglish
    Pages (from-to)83-95
    Number of pages13
    JournalFinancial Analysts Journal
    Volume66
    Issue number4
    DOIs
    Publication statusPublished - 2010

    UN SDGs

    This output contributes to the following UN Sustainable Development Goals (SDGs)

    1. SDG 10 - Reduced Inequalities
      SDG 10 Reduced Inequalities

    Keywords

    • financial crisis
    • pairs trading
    • turbulence

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