Need help with pairs trading project...

[trader_90]

Hi, I'm doing a pairs trading project for a statistics course at the University of Toronto and I'm having a hard time finding a good pair of non-stationary stocks whose spread is stationary. some of the companies that I've tried are wal-mart, Coke, Pepsi and the Target corporation. If anybody has any suggestions please let me know, thanks.

 

[Rhody Trader]

Stationary spread? How much variance would you consider stationary? Just as prices move constantly, so too do spreads.

Probably the closest thing you'll find to stationary spreads between stocks is going to be ones that are in the same industry group - like a pair of airline stocks, or auto makers.