timwest

PAIRS - GE & JPM - over 20 years

NYSE:GE   GENERAL ELECTRIC CO
521 6 2
Jack Welch retired at the top of the 2000 peak in GE             shares and was universally viewed as a genius, visionary, expert and the most evangelist CEO             in the world. I can't help but think that perhaps AAPL             will share a similar fate with the transfer of power from Jobs to Tim Cook. GE             was the largest cap stock in the world at the peak (north of $600 billion back then) versus $400 billion at the peak this year for AAPL             . Does anyone want to analyze this further and report your findings? The point? If you shorted GE             when Welch retired, you could buy something else to hedge it and had you chosen JPM             it would have been an ideal candidate. I had argued at the time that GE             was simply the S&P500             on steroids, so going long the S&P             versus short GE             would have worked wonderfully too. Pairs trading has its benefits. To bring this back to AAPL: If you shorted AAPL             , which stock would you pair it with? The S&P? I think so.
Subscribe to my indicator package KEY HIDDEN LEVELS $20/mo or a discount for a year and join in the trading room KEY HIDDEN LEVELS here at TradingView.com
Tim, it seems to be really loooong term dependency. Does it work on lower time frames? Even on daily data i can see dramatic divergence which can be too risky as hedging strategy specifically in short term.
GE vs JPM
Reply
timwest PRO charttrader
5 years ago
When GE peaked in 2000, it was definitely at an extreme, meaning that GE was far outperforming beyond all rational lines of thinking. That was fertile ground for the start of a great trade. On a trading basis, your point is absolutely correct. Here is what to do: find stocks that move no further than 20% apart from each other in the past 12 months. So, make the graph just 1 years time and see the max spread between the stocks. In that way, pairs trading can reduce the average volatility in your P&L by 50% or more.
Reply
charttrader PRO timwest
5 years ago
I haven't ever used pair trading on stocks but my generall impression is that it should be stocks of the competetive companies. That's why i'm interested about your JPM vs GE analysis.
Reply
timwest PRO charttrader
5 years ago
How can I post a chart like you did so I can reply to you with a graph?
Reply
charttrader PRO timwest
5 years ago
Just click on the 'attach chart' button on the right of the comment edit box and paste graph url in it. Looking forward for your reply.
Reply
timwest PRO charttrader
5 years ago
chart trader, just make the chart go back 2 years and you'll see how closely they move.
Reply
Ideas Scripts Chart
United States
United Kingdom
India
España
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Billing Sign Out