Do You Even Pairs Trade?

Time Stamp: March 30, 2021 11:46 AM
Source Node: 834622

As March draws to a close, equity indices from the Small Exchange are within a few percentage points of unchanged on the month. That said, the last four weeks of stock movement have been anything but sideways for the active trader utilizing pairs opportunities.

Extreme Sector Rotation

As of last Friday, the industrial sector outperformed technology stocks by nearly 10% in the month of March; and just two weeks in, energy was trading almost 10% on top of tech before coming back to a more normal difference of 4% month-to-date.*

The Year in Sector Rotation (Energy vs Industrial vs Technology)

Source: dxFeed Index Services (https://indexit.dxfeed.com)

Gain exposure to popular markets with standardized tick values and expiration dates on the Small Exchange. See why the smalls are making a big splash. >>”></a></span></span><!-- end HubSpot Call-to-Action Code --></p> <h3>Convergence vs Divergence</h3> <p>Active traders can potentially profit from a flat stock market’s battling inner workings via the pairs trade. Small Stocks (SM75) futures bundle industrial, energy, material, financial, and technology stocks together into a single contract, while Small Technology (STIX) futures exclusively hold tech stocks. The two products have captured much of the sector rotating action of the last month and beyond.</p> <table width=

The Stock Pairs Trade

Convergence Divergence -1 Outperformer / +1 Underperformer +1 Outperformer / -1 Underperformer

A sideways equity index isn’t a good enough reason for inactivity; there’s always something to do in this greatly diverse stock market.

*All statistics computed as of 3/26/21

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Source: https://www.danielstrading.com/2021/03/30/do-you-even-pairs-trade

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