2min chapter

Forward Guidance cover image

The Laws Of Quantitative Investing | Michael Robbins

Forward Guidance

CHAPTER

How to Trade Pairs Successfully

When you wander away from the world of bonds, the correlations, the tails, they can get very uncorrelated on the tails, right? Absolutely. And all depends on your timeframe. A friend of mine, Michael Lippgen wrote a paper about how different people can make money on the same trade going in opposite directions as long as their investment horizon is different. It's the intermediate term where things get mixed up. You know, if you're thinking about a trade that lasts a few days or maybe even a few weeks, then a lot of luck and a lot of randomness can come to play.

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