{"id":46993,"date":"2016-03-15T14:34:18","date_gmt":"2016-03-15T18:34:18","guid":{"rendered":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/pair-trading-its-complicated-part-i\/"},"modified":"2024-04-12T12:35:23","modified_gmt":"2024-04-12T16:35:23","slug":"pair-trading-its-complicated-part-i","status":"publish","type":[3762],"link":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/pair-trading-its-complicated-part-i\/","title":{"rendered":"PAIR trading: It&#8217;s complicated &#8211; Part I"},"content":{"rendered":"<div  class=\"bbg-row-container\">\n    <style>section[data-anchor=row-69fe1c9675d1f]::before {\n\t\t\t\tbackground-color: #eeeeee;\n\t\t\t}<\/style>\n    <section class=\"bbg-row bg--custom-color  bg--eeeeee text--black bbg-row--full-bg-bleed\" data-anchor='row-69fe1c9675d1f'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8 bbg-column--valign-bottom\"\n    style=\"\"\n    >\n    <p>    <ul class=\"bbg-categories_list\">\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/trading\/\" rel=\"category tag\">\n                    Trading\n                <\/a>\n            <\/li>\n            <\/ul>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 24px !important\"\n    >\n<\/div>    <h1 class=\"bbg-metadata bbg-metadata--title\">PAIR trading: It&#8217;s complicated &#8211; Part I<\/h1>\n<\/p>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-69fe1c967c93a'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer\"\n        style=\"height: 40px !important\"\n    >\n<\/div>    <p class=\"bbg-metadata bbg-metadata--date\">March 15, 2016<\/p>\n<\/p>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black bbg-row--full-bg-bleed\" data-anchor='row-69fe1c967eb43'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Institutional investor interest in multi-asset and cross-asset strategies is accompanied by an emphasis on workflow system integration.\u00a0 We have found that, although institutions may be using pair strategies in their executions, they have not implemented pair algorithms due to electronic trading workflow limitations.\u00a0 Fortunately, technology innovations exist that offer multiple integration solutions. We discussed this\u00a0during our recent presentation at the Alpha Trader Forum Global Summit in London, and we surveyed institutional investors on cross-asset strategies.<\/p>\n\n<\/div>\n<div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\tbackground:rgba(0,0,0,0);\n\t\t\tpadding: 104px;\n\t\t\t\n\t\t\t\n\t\t}\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content, .bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content p{\n\t\t\tcolor:inherit;\n\t\t}\n\t\t@media (max-width: 768px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 32px;\n\t\t\t}\n\t\t}\n\t\t@media (max-width: 480px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 18px;\n\t\t\t}\n\t\t}\n\t<\/style>\n\t<div class=\"wpb_content_element bbg-card  bbg-card-dark bbg-card_hasCta has_interstitial\" id=\"card_1\" data-card_type=\"no_image\">\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n      \n                      <h3 class=\"bbg-card__title\">Research and insights on the ETF industry directly in your inbox<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Sign up for the newsletter<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_3315519185062482353\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/insights\/newsletter\/\"\n        target=\"_blank\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"432\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/asset_class.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"asset_class\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/asset_class.png 900w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/asset_class.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/asset_class.png 120w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Many attendees indicated that they trade multiple asset classes\u201476 percent Equities, 53 percent Options, and 71 percent Futures.\u00a0 When asked if their firms executed pair-type strategies, nearly half (47 percent) responded Yes.\u00a0 In their execution workflows, 100 percent of respondents use an Execution Management System (EMS), with 94 percent also using an Order Management System (OMS).<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"439\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_EMS_OMS.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"pair_EMS_OMS\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_EMS_OMS.png 900w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_EMS_OMS.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_EMS_OMS.png 120w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Even though nearly a majority of respondents trade pairs, an electronic\u00a0workflow challenge faced by many institutions is the certification of cross-asset algorithms into their EMS and\/or OMS. It is important to identify and leverage integrated solutions due to the versatility of cross-asset algorithms. We do however recognize that the complexity of pair and cross-asset algorithms and their non-standard parameters have been a hurdle to their implementation in EMS\u2019 and OMS\u2019.\u00a0 In this discussion we interchangeably use the industry-common terms \u201cpair\u201d and \u201ccross-asset\u201d to describe these algorithms that can execute two or more securities simultaneously.<\/p>\n<p>Single-order and list algorithms will have common parameters at the single-order level, such as time-scheduled slicing, bid\/ask spread capture aggression levels, or percentage of volume participation.\u00a0 Cross-asset algorithms, on the other hand, will apply additional parameters on the defined relationship of the securities, such as the spread or ratio between the securities trading simultaneously.<\/p>\n<p>Whereas a single-order or list of algorithms execute independently, a cross-asset algorithm is aware of the other securities trading at the same time.\u00a0 In other words, a cross-asset strategy is a contingent order\u2014the action of one order is dependent on the action of another order.<\/p>\n<p>To illustrate with volume profiles, we have 2 orders (selling security A and buying security B) with the equivalent quantities to be executed.\u00a0 The two VWAP (Volume-Weighted Average Price) algorithms will independently complete each order.\u00a0 In the diagram below, selling security A could finish before the buy order in security B is completed, because more volume is trading for security A in the beginning.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"322\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/two_vwaps.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"two_vwaps\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/two_vwaps.png 961w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/two_vwaps.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/two_vwaps.png 120w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>In comparison, a pair algorithm will simultaneously execute both orders on a pro-rata basis, in conjunction with the defined relationship between the two securities.\u00a0 Taking the same example, where the same total quantities need to be executed for each order: the pair algorithm will keep the number of shares executed balanced for each time period.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"280\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_trade.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"pair_trade\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_trade.png 1024w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_trade.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_trade.png 120w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/pair_trade.png 1076w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>In our Alpha Trader Forum presentation, we described the components of pair algorithms. Using a correlation matrix, we pointed out that individual securities aren\u2019t random walks, but are influenced by other securities or markets. For example, two pharmaceutical companies Sanofi [SAN FP] and Bayer AG [BAYN GY] have a significant correlation (0.919) with each other. Household products manufacturer Unilever NV [UNA NA] also has a significant correlation to each of them (0.922 vs Sanofi, and 0.913 vs Bayer AG), as they are all in the consumer sector.\u00a0 The audience recognized that their orders are not executed in isolation, but can be impacted by other market forces.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"500\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/corr_matrix.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"corr_matrix\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/corr_matrix.png 1024w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/corr_matrix.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/corr_matrix.png 120w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/corr_matrix.png 1317w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>If a statistical relationship can be identified between 2 securities, then the relationship can be defined with a formula. Common formulas are:<\/p>\n<ul>\n<li>Spread = price A \u2013 price B<\/li>\n<li>Ratio = price A \/ price B<\/li>\n<\/ul>\n<p>To analyze a Spread or Ratio, the Bloomberg functions HS&lt;GO&gt; and GR&lt;GO&gt;, respectively, can be used.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"571\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/HSpread1.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"HSpread1\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/HSpread1.png 1024w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/HSpread1.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/HSpread1.png 120w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/HSpread1.png 1139w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>To illustrate how a pair algorithm works, let\u2019s use a Spread example. As defined previously, a Spread is the price of security A minus the price of security B (price A \u2013 price B). In the diagram below, Selling A and Buying B, we\u2019ll use the value of 2 as the spread to start trading the pair.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"413\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/spread_capture.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"spread_capture\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/spread_capture.png 872w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/spread_capture.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/spread_capture.png 120w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>The first condition for a pair algorithm execution is to look at the relationship between the two security prices. When the spread between A and B is higher (or wider) than 2, then it is the right time for the pair algorithm to trade.\u00a0 The Sell A security is trading higher, and\/or the Buy B security is trading lower.\u00a0 When the spread is less than 2, the pair algorithm is not trading.\u00a0 In our example above, the pair algorithm should be trading after time period 6.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"586\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/volume_capture.png\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"volume_capture\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/volume_capture.png 872w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/volume_capture.png 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/volume_capture.png 120w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>We described earlier a second condition for a pair algorithm to execute\u2014when volume is available in both securities at the same time.\u00a0 Looking at the same spread example, after time period 6, the price spread is higher than our 2 limit, and should be executing.\u00a0 However, no volume traded for security B during time periods 6 and 7.\u00a0 Therefore, the pair algorithm will only start executing after time period 8 when both the price and volume conditions are met.<\/p>\n<p>&nbsp;<\/p>\n<p>As discussed, single-order algorithms executing independently from each other may optimize the execution at the single order level.\u00a0 In contrast, a pair or cross-asset algorithm recognizes that correlation may exist between the 2 securities, which could optimize the execution for other factors, such as, maintaining market or cash neutrality between a buy and sell order or handling the price correlation between the 2 securities.<\/p>\n<p>In our next installment of this series, we will take a more detailed view into how pair algorithms work.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1600\" height=\"1067\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/PAIR-Blog-Post-3.14.16_1.jpg\" class=\"bbg-single-image__image attachment-full\" alt=\"\" title=\"Shipping Operations At Port Of Hamburg As Imports And Exports Predicted To Reach Record Highs\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/PAIR-Blog-Post-3.14.16_1.jpg 1600w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/PAIR-Blog-Post-3.14.16_1.jpg 300w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/PAIR-Blog-Post-3.14.16_1.jpg 1024w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/PAIR-Blog-Post-3.14.16_1.jpg 360w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/imported\/tradebook\/sites\/6\/PAIR-Blog-Post-3.14.16_1.jpg 120w\" sizes=\"auto, (max-width: 1600px) 100vw, 1600px\" \/>\n        \n                <figcaption class=\"bbg-single-image__caption\" style=\"text-align: left\">\n                Pedestrians cross footbridges in the Speicherstadt warehouse district at Hamburg port in Hamburg, Germany, on Thursday, Jan. 14, 2016. German exports rose 5.4 percent while imports were up 5.7 percent in 2015, the statistics office said. Photographer: Krisztian Bocsi\/Bloomberg\n        <\/figcaption>\n            <\/figure>\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <style>section[data-anchor=row-69fe1c969f93f]::before {\n\t\t\t\tbackground-color: #eeeeee;\n\t\t\t}<\/style>\n    <section class=\"bbg-row bg--custom-color  bg--eeeeee text--black bbg-row--full-bg-bleed\" data-anchor='row-69fe1c969f93f'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2>Recommended for you<\/h2>\n\n<\/div>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 24px !important\"\n    >\n<\/div><script>\n    window.feed = window.feed || {};\n    window.feed['69fe1c96a2eb5'] = 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Now, let us do that for you.<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_1319857130036584129\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/request-demo\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Institutional investor interest in multi-asset and cross-asset strategies is accompanied by an emphasis on workflow system integration.\u00a0 We have found that, although institutions may be using pair strategies in their executions, they have not implemented pair algorithms due to electronic trading workflow limitations.\u00a0 Fortunately, technology innovations exist that offer multiple integration solutions. We discussed this\u00a0during&hellip;<\/p>\n","protected":false},"author":91,"featured_media":15840,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"template-article.php","format":"standard","meta":{"_yoast_wpseo_primary_category":"444","footnotes":""},"categories":[444],"tags":[],"series":[],"class_list":["post-46993","post","type-post","status-publish","format-standard","hentry","category-trading","type-article"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.11 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>PAIR Trading: It&#039;s Complicated - Part I<\/title>\n<meta name=\"description\" content=\"Cross-Asset PAIR algorithms can identify relationships, but provide utility only with seamless workflow integration with OMS and EMS platforms\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/pair-trading-its-complicated-part-i\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"PAIR Trading: It&#039;s Complicated - 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