statistical arbitrage

Statistical arbitrage is a way to make money out of small price differences between two investments. It's like a game of spotting the difference. When you buy one investment, you can watch the other very closely. If the price of the other investment goes up, then you sell the first one and buy the second one - because you'll make money from the difference in the prices. You can then sell the second one, and buy the first one back. Because the price difference between the two investments is usually very small, you can make a lot of money if you do this many times.