What Is Statistical Arbitrage? How Traders Use Stat Arb

Statistical arbitrage in trading is an alternative to traditional strategies based on technical and fundamental analysis. The method is based on a mathematical model that uses statistical correlations between the prices of highly correlated assets. If the spread between their quotes widens, it is highly likely to return to its average value.This review explores the statistical arbitrage strategy and explains how to implement it using algorithmic software.Major Takeaways Statistical arbitrage, or