Trend-Following Pairs Trading

Instead of betting on the convergence of two assets, trend-following pairs trading capitalizes on the divergence between them. This approach involves:

1. Identifying two correlated assets that are beginning to diverge
2. Going long on the outperforming asset and short on the underperforming one
3. Riding the trend until it shows signs of reversal

This strategy assumes that the divergence will continue before potentially reverting.

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