BNS/RY pairs trade

On Dec 5 we recommended a pairs trade, long BNS short RY, simple on the basis that the two stocks were out of phase. BNS was still dropping whereas the RY had already rebounded a good part of its most recent fall. For those not inclined to do this relatively “safe” trade , we suggested just buying BNS. Here are the charts;

BNS 7 jan 2012RY 7 jan 2012

From Dec 5 BNS has gained about 51.43 – 48.25 = 3.18 and RY  52.05  – 49.10 = 2.95, for a net gain of only 23 cents. Going long BNS only clearly worked out best with an 6% gain in just a week. We would exit both trades acknowledging that there may be a little more to go for BNS