|Z| ≥ 2 + cointegrated

Spread is 2 standard deviations from mean AND historically reverts. Tradeable: long the cheap, short the expensive.

Half-life 5-30 days

Time to revert half the spread. Sweet spot. Half-life <5d = noisy. >30d = trade may never close.

Z > 3 = caution

Spread may be diverging structurally (cointegration broken). Could continue widening — confirm with fundamental view.