Arbitrage Pair Trading on gold, but the fees probably will wipe out all the gains
Go short: $Gold Trust Ishares(IAU.US$
Go long: $SPDR Gold ETF(GLD.US$
Reasons for the above strategies
Go long: $SPDR Gold ETF(GLD.US$
Reasons for the above strategies
When finding the perfect pair trade, the best assets pair should have a correlation of 1 or -1. This will allow us to create arbitrage opportunity by taking advantage of the mispricing by the market.
So I picked 2 gold ETF. Both of them by right should be moving at the same rate. Which they are most of the time as seen in the comparison chart below.
however, we can also see that $Gold Trust Ishares(IAU.US$ had recently been above $SPDR Gold ETF(GLD.US$ which means that there is some opportunity for pair trading. As this gap should close over time. So shorting IAU and Longing GLD will be a smart move.
However, as the gap is so small, after accounting for fees. This probably won't be a profitable trade ![]()
![]()
![]()
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Moo Contributor
crawled out of poverty, working towards FIRE!! (financial independence, retired early)
14KFollowers
104Following
16KVisitors
Follow
Gong Xi Fuck Cai ❤ :