 Pairs Trading: A Strategy for Consistent Profits Pairs trading is a market-neutral strategy that involves simultaneously taking a long position in one stock and a short position in another highly correlated stock. A "long" position means owning a security with the expectation that its price will rise, while a "short" position involves selling borrowed shares with the expectation that their price will fall. In our proprietary platform, SageFusion, we analyze extensive datasets to identify statistically correlated pairs of stocks that typically move together. When these correlations temporarily diverge, we execute a pairs trade: going long on one stock and short on the other. The strategy takes profit when the price movements align again, targeting a return of at least twice the average true range (ATR). The ATR, a technical indicator, measures market volatility based on the 14-day moving average of price ranges. To protect gains, we implement a trailing stop-loss order, which adjusts dynamically as the trade moves in our favor but remains fixed if the price reverses against us. Using this approach, we identified two ticker symbols that have consistently generated profits every year, even during financial downturns. This highlights the resilience and potential of the pairs trading strategy in any market environment. 
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 Strengthen Your Financial Portfolio with the Wilcox Model At our firm, we specialize in uncovering unique data points to refine financial analysis. The Wilcox Model incorporates an innovative mix of data sources, including astronomical events like star alignments, sunspots, and lunar cycles. While the specifics of our algorithm remain proprietary, back-testing from 2010 to 2016 demonstrated an impressive 25% return. While a 4% annualized return may seem modest, this strategy stands out due to its low correlation with broader market trends. By integrating the Wilcox Model into your portfolio, you can unlock valuable diversification opportunities and enhance risk mitigation. The Value of Back-Testing and Investment StrategiesBack-testing involves applying a trading strategy to historical data to evaluate its real-world performance. This process ensures our models are not just theoretical but also actionable. In investment terms:
(Note: Back-testing was conducted using Python to ensure accuracy and reliability.)  Navigating the Financial Landscape in 2025: From Trump Coin to Memecoins, Gold, and Political Shifts1/19/2025  Political Shifts
The world of finance has seen major shifts in recent years, and 2025 is shaping up to be a year of reckoning for investors, governments, and everyday citizens. With the rise of cryptocurrency, the spotlight on new digital assets like Trump Coin, the growing popularity of memecoins, and the increasing tension surrounding political issues like TikTok bans and state-specific challenges in Florida and California, where should you be looking to secure your financial future? Is Economics Out the Window? The Rise of Trump Coin and Other Digital Assets The traditional economy, built on centuries of structured financial systems, seems to be unraveling at times. The appearance of Trump Coin, a digital asset tied to the former president’s brand and political base, has sparked a wave of discussion about the role of cryptocurrencies in modern finance. Some argue that we are witnessing the end of traditional economics, as more digital assets, meme-based tokens, and blockchain innovations are challenging the power of central banks and the traditional banking system. Trump Coin is a prime example of how politics and cryptocurrency are intertwining. Whether it succeeds or fades, it highlights the growing trend of crypto assets being shaped by pop culture, social movements, and political figures, rather than the fundamental principles of monetary policy. As cryptocurrencies like Trump Coin begin to play a role in political discourse, the lines between finance and governance continue to blur. Memecoins: A Wild Ride vs. Gold's Stability One of the most volatile trends in the crypto space has been the meteoric rise of memecoins. Originally started as jokes or community-driven projects, coins like Dogecoin and Shiba Inu gained substantial popularity, despite their lack of fundamental value. But how have they performed relative to traditional assets like gold, which has long been considered a safe haven in times of economic uncertainty? While memecoins may experience short-term spikes, their long-term value remains speculative at best. Many investors have jumped in hoping to ride the wave of hype, but the reality is that memecoins are often susceptible to large swings in sentiment. Gold, on the other hand, has remained a relatively stable store of value. While it doesn't deliver the astronomical returns that memecoins sometimes promise, gold has proven resilient in the face of economic crises, inflation, and political instability. In 2025, as the economic landscape evolves, it's likely that investors will continue to look for balance. While memecoins may still have a place in the high-risk part of a portfolio, gold will likely remain a go-to asset for those seeking stability in uncertain times. The TikTok Ban and its Implications for the Future One of the most talked-about political issues today is the potential TikTok ban in the United States. This app has become a cultural phenomenon, with millions of users, influencers, and businesses leveraging its platform to reach audiences. However, concerns over data security, privacy, and national security have prompted government action, with some lawmakers pushing for a ban. The issue with TikTok goes beyond just a social media app. It taps into broader concerns about government regulation of digital platforms and the control of information in an increasingly interconnected world. If TikTok is banned, it could set a precedent for the future of digital regulation, particularly in the tech and crypto spaces. In 2026, this issue could have far-reaching implications for other apps, digital currencies, and how governments monitor and control online spaces. However, as the new Trump Administration joins in, the ban will likely be reversed. Looking Ahead to 2026: Where Should We Go? Given the complex and rapidly changing economic and political landscape, where should you consider going in 2026? Here are a few possibilities: 1. Companies specializing in data center construction to meet the increasing demands of technology and power infrastructure. 2. Firms focusing on construction projects in regions experiencing significant population growth and movement. 3. Businesses utilizing advanced technology and blockchain to modernize banking infrastructure and drive innovation in the financial sector.  In 2022, everyday prices, including food, housing, and gas, have seen significant increases. Food prices in the United States have risen by about 10% compared to 2021, with some reports of takeout food costs surging by as much as 30%. Housing has also climbed by an additional 10%, primarily due to the longstanding housing shortage. The U.S. has needed to produce 1.5 million homes annually for over a decade but has failed to meet that demand, even in a stable economy. With supply chain disruptions and raw materials taking up to six months longer to ship, housing prices are likely to remain sticky. Furthermore, many individuals and corporations refinanced their mortgages in 2020 at ultra-low 2.5% interest rates. With current rates rising, there is little incentive for people to sell or move out of existing homes. As new buyers struggle with affordability, demand for rental properties is set to rise. Additionally, the Federal Reserve’s interest rate hikes are increasing borrowing costs for landlords using HELOCs, who in turn pass these costs onto tenants. On top of this, oil prices, which briefly went negative in 2020, are now at unsustainable levels, compounding the financial strain. This combination of factors—higher prices for food and housing, rising borrowing costs, and tightening corporate budgets due to fears of a recession—creates a challenging environment for consumers. A historical comparison can be drawn to when Europe adopted the Euro. Initially, countries like the Netherlands had their old currency values, but the new Euro-denominated prices were significantly higher, which led to inflationary pressure. We could see a similar pattern with real estate continuing to rise, food prices staying elevated, and gas prices returning to more normal levels in the next couple of years. As a result, employers will likely need to offer higher wages to attract talent, and countries with lower food price inflation may see a surge in immigration. It’s also important to note that when prices become misaligned, as we saw with Bitcoin in 2021, they eventually revert to the mean, following the principle of reversion. However, housing and food prices are generally more rigid, as seen during the 2008 crisis. Additionally, the M1 money supply has increased by 500% since 2020, further fueling inflation. Over time, this inflation will likely be offset by companies and consumers cutting back on spending. Prices will eventually revert to more sustainable levels, and political elections may act as a catalyst for these adjustments, leading to more stable pricing in the future.   We’re About to Find Out
On Thursday, September 9th, 2020 the Kansas City Chiefs will face the Houston Texans on NBC in prime time. This game is poised to set new records for betting activity on a Week 1 NFL game. But will this surge last? The boom in active trading has been nothing short of explosive, spurred by platforms like Robinhood and the removal of trading commissions by major brokers in the fall of 2019. Trading has never been easier or more accessible. In the first half of 2020, Robinhood accounts grew by 30%. With popular stocks like Tesla, Zoom, and DraftKings soaring in value over the past few months, and the charts of SPY and QQQ looking like the "Cliff-Hangers" game on The Price Is Right, it’s likely that the average new retail investor has seen at least some positive trades and is feeling optimistic. With no commissions eating into profits, day trading (or at least short-term trading) may seem like an appealing alternative to sports betting for those looking for some action. In most NFL bets, you wager $110 to win $100. For example, if the sportsbook takes in $110 on both the Chiefs and the Texans, the winning bettor (after considering the point spread) gets $210, and the sportsbook keeps the extra $10. Over time, that 10% commission on losing bets means you need to win over 52.4% of the time to stay profitable. Most bettors don’t achieve that long-term, so they either accept the losses as part of the fun or convince themselves they break even through selective memory. On the other hand, anyone with an E*TRADE account can easily track their balance and see which trades have made money. You can forget the heartbreaks from teams like the Jaguars or Bears, but when you log in, you’re reminded of how your GE stock is worth far less than what you paid. A look at Tractor Supply (TSCO) might help lift your spirits again, though. Crossing Over Some avid football bettors are now crossing over into the world of stock trading. High-profile figures like David Portnoy, the outspoken founder of Barstool Sports, have appeared multiple times on CNBC's Mad Money with Jim Cramer, while DraftKings ads have started airing during that show. Is Stock Trading Replacing NFL Betting? The NFL dominates sports betting, and academic research shows that baseball betting is often a substitute for NFL betting (source: SAGE Journals). When the NFL season kicks off, even the preseason, betting activity for baseball typically declines as it ramps up for football. In Gary Mayer's memoir, Bookie: My Life in Disorganized Crime, he details how he took baseball bets to keep his football clients engaged until the next NFL season. Football bettors crave action, and this Thursday night, they’ll get it. With Andy Reid’s mustached Kansas City Chiefs taking the field and a Las Vegas total set at 54.5, this game promises to be high-scoring and full of excitement. Will Bettors Abandon Stock Trading? I doubt it, but there will be trade-offs. If the NFL season remains injury-free and the games are exciting, I predict that Monday morning trading will dip as bettors refocus on football. If the stock market continues its upward climb, NFL betting may lose some of its appeal as people put their energy into making money in the market. However, if the market hits a rough patch with a sustained downward trend, NFL betting and viewership will surge. Personally, I’m hoping for both a strong market and exciting games, but whatever happens, there will undoubtedly be a balancing act between sports betting and stock trading.  At SageFusion, our commitment to objectivity allows us to provide unbiased insights without any strategic ties to vendors. For those looking to identify emerging industries, tools like the CB Insights color grid can offer valuable perspectives. These grids enable you to analyze whether your target industry is poised for growth. Current data shows significant momentum in industries such as Software, Mobile & Telecom, Healthcare, and Internet. With the strong correlation between market performance and industries attracting funding, these insights can be applied across hiring, investment strategies, and prospecting.
Here are some key examples highlighting these trends (A look back to 2020):
 At SageFusion, we emphasize that the insights shared here are for educational purposes only. This post reflects on the year 2020, during the height of the COVID-19 panic, and explores an intriguing portfolio with minimal correlation to the S&P 500. In hindsight, it performed surprisingly well during that period.
One noteworthy portfolio we designed during the March 2020 COVID-19 market crash exemplifies how strategic diversification and currency exposure can help reduce retirement portfolio volatility. In times of market turbulence, many investors panic, but our team at Investment Science relied on data-driven insights to craft a portfolio that aligned with the unique needs of a 62-year-old investor seeking lower-risk exposure with upside potential. Key Insights from the Portfolio Design
Suggested Portfolio Breakdown
The Takeaway: The key to minimizing retirement portfolio volatility lies in diversifying your assets, incorporating strategic bond exposure, and balancing currency risks. This thoughtful approach provides stability during market downturns and potential for growth as the market recovers. By staying informed and considering the right mix of bonds, real estate, and equities, you can help protect your retirement savings and achieve long-term financial success. If you’re looking to explore ways to manage your retirement portfolio more effectively, consider scheduling a consultation with one of our experts at SageFusion. We’re here to help you navigate the complex world of investments with the latest tools and insights.  Understanding Different Volatility Models for Options Trading: A Comprehensive Comparison
In options trading, understanding volatility is essential for crafting effective strategies and managing risk. Various models attempt to quantify and predict volatility, each with unique approaches, strengths, and limitations. Let’s delve into some of the most prominent volatility models and how they compare in the dynamic landscape of options trading. 1. Historical Volatility: This model measures past price movements to assess the stock's tendency to fluctuate. It’s calculated by analyzing the standard deviation of returns over a specific period. While simple and data-driven, it assumes the past will mirror the future, which may not always hold true in rapidly changing markets. 2. Implied Volatility: Derived from options pricing models such as the Black-Scholes, implied volatility reflects market expectations for future price fluctuations. It’s forward-looking and dynamic, adjusting as market sentiment evolves. However, it can be influenced by market anomalies, making it less reliable during extreme conditions. 3. GARCH (Generalized Autoregressive Conditional Heteroskedasticity): GARCH models focus on volatility clustering—where high-volatility periods tend to follow one another. This statistical model is widely used for its ability to adapt to changing market conditions. Despite its predictive power, GARCH can be complex and computationally intensive. 4. Stochastic Volatility Models: Unlike deterministic models, stochastic volatility models assume that volatility itself changes randomly over time. They are more flexible and better at capturing market realities, such as volatility skew and jumps. However, their complexity often requires advanced computational tools and expertise. 5. Jump-Diffusion Models: These models combine stochastic volatility with sudden price jumps to reflect real-world market behaviors like news shocks. They provide a more accurate picture of market movements but require substantial input data and intricate calibration. 6. Volatility Surface and Smiles: Volatility surfaces and smiles graphically represent variations in implied volatility across strike prices and maturities. These tools highlight market anomalies and provide deeper insights into trading strategies. Yet, their reliance on real-time data can make them challenging to interpret without specialized software. Which Model Should You Use? The choice of volatility model depends on your trading objectives, risk appetite, and the tools at your disposal. While simpler models like historical volatility may suffice for basic analysis, advanced models like GARCH or stochastic volatility offer nuanced insights for complex strategies. SageFusion’s Edge in Options Trading: At SageFusion, we leverage advanced AI-driven tools to analyze volatility using the most relevant models for your trading needs. Our platform integrates cutting-edge algorithms with decades of financial expertise, empowering traders to make informed decisions in today’s volatile markets. Discover how SageFusion can optimize your options trading strategies.  At SageFusion, our advanced platform is designed to help you navigate financial panics with ease by performing rigorous stress tests during times of economic distress. While our proprietary Investment Lab remains exclusive and is not publicly accessible, we leverage a comprehensive data warehouse to conduct detailed financial analyses and stress tests whenever market instability arises. This robust database allows us to assess whether your clients' portfolios are at risk of overexposure. Our approach involves analyzing extreme values of financial instruments during market panics, drawing on historical data from significant market crashes, including those in 1987, 2008, and 2020. These events underscore the importance of critically evaluating conventional investment advice.  While many financial experts advocate a long-term "buy and hold" strategy, it’s essential to recognize that severe market downturns can coincide with pivotal life events, such as retirement, resulting in prolonged recovery periods.
Moreover, the perception of gold as a safe haven during market volatility requires reevaluation. For instance, gold saw a 60% decline in 2008 and a 30% drop in 2020. These downturns occur because, during extreme market stress, both individuals and institutions often engage in a "flight to safety," leading to the liquidation of all assets, including bonds. Consequently, almost all asset classes can crash simultaneously—a phenomenon that is further exacerbated by the widespread use of exchange-traded funds (ETFs). Since ETFs encompass a diverse range of assets, their mass liquidation can lead to correlated declines across various asset classes, undermining traditional diversification strategies. To gain a comprehensive understanding of potential drawdowns, refer to the attached spreadsheet detailing maximum drawdowns during financial crises. This information can aid you in evaluating the resilience of your investments against significant market downturns. Maximum Drawdowns During Financial Crises
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AuthorMichael Kelly has been working within banking technology for over a decade, and his experience spans across algorithmic trading, quantitative finance, hedge funds, private equity, and machine learning. This page is intended to educate others on the capabilities of SageFusion. ArchivesCategories
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