Correlations to Reduce Risk in Pairs Trades

Trading the New Silver Surge

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Silver volatility exploded in recent days as a newly emboldened army of retail investors and traders targeted the commodity with their collaborative “momentum” approach. The retail narrative driving GameStop (GME) higher last week was certainly riveting, but the fact is, momentum (aka “momo”) investing and trading has been around for many, many years. To wit, … Continued

Trading the Gold-Silver Ratio Collapse

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After notching a record high in April 2020, the gold-silver ratio has dropped back toward its historical mean, rewarding savvy pairs traders along the way. 2020 has seen its share of successful trading stories, but the collapse in the gold-silver ratio might be one of the most underreported.  Precious metals were in focus earlier this … Continued

Trading the Silver Surge

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All that glitters isn’t gold—it can be silver, too. Topping $20/ounce for the first time since 2016, silver shimmered through its best quarter in nearly a decade during Q2 of 2020. Gold, currently trading above $1,800/ounce, may be closer to its all-time high of $1,920, but silver has actually had the better run since mid-March. … Continued

Trading Gold as a Proxy for Fear

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Trading China’s Coronavirus (Part 11) Coronavirus Updates: The estimated number of total global coronavirus infections has risen to more than 95,334 with at least 3,285 associated fatalities Approximately 273 of the deaths linked to the novel coronavirus have occurred outside of mainland China across 14 countries There are currently 158 confirmed cases of COVID-19 in … Continued

Pairs Trading, Correlations and Cointegration

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Traders looking to expand their repertoire of available trading strategies, or enhance their existing skill set, might want to consider a deeper dive into pairs trading. Pairs trading involves taking opposite but equal positions in two different underlying securities and are sometimes referred to as “intermarket spreads.” A key to the pairs approach is that … Continued

Gold-Silver Ratio Pushes Back Toward Record Highs

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Rising geopolitical tensions, declining interest rates, a weakening U.S. dollar. If one were to list the top factors that traditionally push gold prices higher, these three would undoubtedly land in the top five.  And as of mid-January 2020, gold has been seemingly caught in a perfect storm, as each of the factors listed has become … Continued

Silver Finally Follows Gold Higher

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When rare and extreme things occur in the financial markets, news of these events usually spreads like wildfire. This tends to capture the attention of not only investors and traders, but also millions of people that don’t usually monitor the financial markets. For example, in the entire trading history of the Dow Jones Industrial Average, … Continued