We traded out of Wheat ($WEAT) this morning and into Babcock & Wilcox ($BW) and Compass Minerals ($CMP).
Babcock sports a 14% edge and a discount to expected (DEV) value of 47%. It made a >3σ move to a low of $0.75 on earnings yesterday.
Compass sports a 7% edge and a DEV of 20% at the time of writing and the stock continues to drop. Compass currently hovers >3σ below its expected value of ~$21.50.
Both stocks are examples of trades wherein edges are spectacular and anticipated holding times short. Each represents a statistical advantage bet which assumes price will migrate back into an envelope containing up to 95% of normally distributed data.
