Pairs CFDs have already made a splash on Wall Street by empowering more institutions to take on fresh opportunities to bet on contrasting ends of complex industries. 

Now, as we enter the unpredictable age of Trump 2.0, we’re seeing more polarizing shifts throughout a number of industries. As these factions become accentuated throughout the energy sector, commodities, and other key sectors, are we heading for a golden age for Pairs CFDs? 

Although technology is helping to pave the way for faster reactions among hedge funds and key institutional players, the ability to make predictions about prices for major commodities like crude oil, liquefied natural gas, iron ore, coal, and metals like copper is set to become more fraught in 2025. 

As investors seek out the best possible market impact based on their available data streams, maximizing their profit potential through decisive Pairs CFDs could become more commonplace on Wall Street. 

Pairs CFDs in Volatile Markets

Pairs CFDs have been steadily growing in popularity since the advent of the contract for difference (CFD) around 20 years ago. Sometimes known as statistical arbitrage, or a market neutral strategy, the approach has become a popular way to bet on the varying fortunes of different instruments. 

The strategy itself is the act of an investor buying into one instrument while selling another, hence its name ‘pairs’. When using Pairs CFDs, you are essentially trading a pair of CFDs by adopting a long position and a short position simultaneously for two related shares in the same industry. 

At a time when industries are experiencing plenty of volatility due to variations in ESG appetite, trade tariffs, and adverse weather conditions, Pairs CFDs can offer plenty of value for institutional investors, and it’s worth seeking prime solutions that can offer access to high-potential CFDs as a result. 

Trends Within Pairs CFDs

Asia is the leading market for Pairs CFDs at present, with Japan emerging as the leading market in terms of appetite. 

This trend is largely driven by Japan’s familiarity with forex trading and the similarities between both trading strategies when it comes to pairs and managing risk between two instruments. 

The concept of leaving stop losses to manage risk is another reason why Pairs CFDs have the potential to gain traction in a more uncertain 2025 market outlook. 

While some of the most popular Pairs CFDs today focus on pitting indexes against one another like NASDAQ vs Nikkei, others are using the Dow vs gold trading pair to speculate on which has the stronger investor sentiment. 

Another emerging trend among retail investors has seen Pairs CFDs focus on a specific mining stock versus gold, which involves hedging out the gold exposure to gain sole exposure to the company risk. 

Donald Trump’s second term in the White House has accelerated a growing trend in 2024 that’s seen more hedge funds bet against the clean energy transition while going long on fossil fuels. With the $5 trillion hedge fund industry entering long positions in oil, gas, and coal while shorting batteries, solar, electric vehicles, and hydrogen, we’re seeing instances of greater Pairs CFD opportunities in real-time. 

According to a recent Guardian report, fossil fuel and mining companies have won $92 billion of public money from states, and many cases were backed by financial speculators, signifying a more widespread pushback against green initiatives. 

These instances of varying fortunes within the energy sector underline the more widespread potential of institutions using Pairs CFDs to speculate on industry fluctuations. 

Trade Wars to Accelerate Volatility

President Trump’s willingness to use tariffs as a trade bargaining tool is set to punctuate his second term in the White House, and the volatility that’s already arising from the trade wars underway between the US and historical trading partners is creating fresh opportunities for investors. 

Recently, price premiums for aluminium in the United States have rallied to record highs due to the threat of tariffs on imports of the metal used in transport, construction, and packaging industries. 

With Trump restoring 25% tariffs on aluminum imports, as well as fees on other metals and commodities imported from around the world, we’re set to see more instability across global sectors. 

For hedge funds equipped with strong analytical insights and artificial intelligence predictive analytics, Pairs CFDs will become a key player in helping to uncover trading opportunities as industries come to terms with the new normal of tariff volatility. 

Social sentiment analysis will be a crucial component in the armory of institutions moving forward, with the deciphering of the Trump administration’s intentions and threats crucial in knowing when to long and short key positions. 

Navigating the New Normal

We’re already seeing the uncertainty of Trump’s trading tariffs affect different industries on a global scale. With markets trending lower off the back of uncertainty, institutions will shift to alternative investment strategies in 2025. 

In the year ahead, we will see the use of Pairs CFDs to take advantage of the shifting fortunes of key industry players. Whether it’s juxtaposing fossil fuel and clean energy stocks, or looking ahead to farming in the age of tariffs, 2025 will pose many challenges for investors, and plenty of opportunities to expand profit margins. 

Hedge funds have long found prosperity in the face of uncertainty, and we can be reasonably confident that the year ahead will rank high for unpredictable markets.