SaxoTV

Two's company - How equity pair trading works

438 views
March 10, 2015 eq, eq3, eqeqeq, equitieis, equities, equities 2014, equities 2015, equities in china, equities oracle, equities over valued, equities prices, equities saxo, equities strength, equities trade, equities trading, equities v bonds, equitiy, equity, equity analyst, equity bubble, equity clients, equity correction, equity decline, equity falls, equity index, equity index trading, equity market, equity market 2014, equity market 2015, equity markets, equity platform, equity portfolio, equity portfolios, equity research, equity rise, equity risk premium, equity risk premiums, equity strategy, equity trades, equity trading, equity us, equity valuation, equtiies, equtiy, pair, pair trade, pair trade ftse dax, pairs, pairs trade, pairs trade ftse 100 and dax 30, payrolls, rq, rqeq, saxo bank, saxo tv, trade idea, trade view, trader, traders tale, tradingfloor.com
Saxo Bank's Mads Koefoed talks us through equity pair trading. Using Burberry and LVMH, the British luxury clothing brand has seen its shares surge over the last six months while the French luxury brand LVMH, owner of Louis Vuitton and Hennessy cognac, is up around 50% in the same period.

Trading the equity pair offers opportunities; as Mads Koefoed explains: "This has sent the spread between the two equities out to 2.3 suggesting a potential return of 4% in the case of a complete reversion to the (zero) mean. This has happened no less than 24 times in the last six months.".