09. Trade Pairs of Stocks

Clarification

The slide at time 1:28 should say:
If spread widens, short the spread: short the asset that has increased, long the asset that has decreased (relatively).

if spread narrows, go long the spread:
short asset that has increased, long the asset that has decreased (relatively).

Backtesting

Note that we will dedicate an entire module plus project on backtesting in term 2, which will incorporate all of the tools you learn in Term 1 and Term 2.