This is an quiz question in linkedin's algo trading class.
Question: What approach would an algo trader use if the previously stable spread on ETF ABC widens against ETF XYZ from ABC becoming more valuable versus XYZ?
The answer is
Go Long ABC and Short XYZ
And the explanation is Yes, the algo trader would bet on the spread reconverging.
I have a hard time understanding the question. What's spread in this case? The bid-ask spread? If abc is becoming more valuable, which should I short abc if it's going to go back to normal?