Definition of Convergence in finance
- Posted on November 18, 2019
- Financial Terms
- By admin admin
Convergence is when two items move in different directions to each other but towards the same point. In finance the term convergence is applied to assets, indicators and indices.
Convergence can provide a signal to enter a position, for example if the difference in the prices of Brent Crude and WTI crude starts to decrease, a potential strategy would be to buy one and sell the other in the expectation that they will diverge again in the future.
Convergence can provide a signal to enter a position, for example if the difference in the prices of Brent Crude and WTI crude starts to decrease, a potential strategy would be to buy one and sell the other in the expectation that they will diverge again in the future.
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