Pairs Trading and Statistical Arbitrage: AI Models for Market-Neutral Returns
2026-03-25 · AI & Machine Learning in Trading
Pairs trading generates returns independent of market direction by exploiting temporary mispricings between related securities.
Dynamic Hedge Ratios
Static hedge ratios deteriorate over time.
Entry and Exit Optimization
Z-score thresholds for entry and exit are optimized per pair based on historical mean-reversion speed, transaction costs, and recent spread volatility.