By now, every active trader on the planet is well aware of the bidding war between Hewlett-Packard Company (HPQ) and Dell Inc. (DELL) over cloud computing company 3PAR. In fact, the battle has raged throughout the weekend. But are you familiar with how the two have been trading as a pairs strategy?
As one might expect, the recent tussle has raised the profitability of the pair as the spoils of war have swung from one side to the other (whether for better or worse). However,the pairs equity curve really began recovering far in advance of the bidding, and it’s easy to imagine this coupling as additionally instructive of how pair profitability benefits from rising cross-correlations and volatility on a market-wide basis as the recent market correction has progressed.
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