timwest
Short

PAIRS TRADE: Short EQR (Reit) vs Buy HYG (Junk Bonds)

NYSE:EQR   EQUITY RESIDENTIAL
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EQR is outperforming High Grade Corporate Bonds. They typically move together but this time the rental income to EQR has moved up lately and it is driving the shares higher. But it may have gone too far as now HYG has lagged too far behind. Greed and a new high may be getting the bulls too excited here. Buy HYG and Sell EQR and make money when the spread comes back together.

Note the spread widens out and comes back together. Three examples posted.

Risk 5%. Reward 10% Probability of a Win in the next 60 days: 50% guess.

Tim 1PM EST 10/29/2014 Wednesday HYG 92.54, EQR 67.88 last.
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Comments

Statiscally sound! :D
Very nice.
Reply
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