Decoded Intelligence Signal
Spread (Pairs Trading)
advanced
strategy
Verified: May 27, 2026Lexicon Core Definition
The price difference between two cointegrated assets adjusted by the hedge ratio: Spread = Price(A) − β × Price(B); pairs trading strategies enter when the spread Z-score deviates significantly from its historical mean and exit when it reverts, profiting from the convergence.
Analysis Breakdown
The price difference between two cointegrated assets adjusted by the hedge ratio: Spread = Price(A) − β × Price(B); pairs trading strategies enter when the spread Z-score deviates significantly from its historical mean and exit when it reverts, profiting from the convergence. Full explanation coming soon when Journey 22 content is ingested.