What is a Paired Equities Model?
Paired Equity Models trade back and forth between two equities depending upon the status of some signal. The signal may be based on the price performance of one of the equities, on the relative performance of the two equities, or on a general market timing signal. One model famous for deliverying high performance with low risk in the 1990’s paired the Price Science & Technology Fund with a money market fund, and traded between them based on a general domestic stock market timing signal. Another famous strategy in the 1990’s alternated between holding 100% Fidelity Select Energy and 100% Fidelity Select Air Transportaion.
