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Conventional wisdom says picking American Airlines over Delta, or Lockheed over Northrop is a clean equity pair trade.

Your risk is simply your ability to identify the winning airline stock or best defence name. But beware hidden macro risks. Some stock picks are really just economic proxies in disguise.

$AAL and $LMT both carry positive exposure to US economic growth.
$DAL and $NOC? Not so much.

So while these trades look sector neutral, they’re actually long the US economic cycle - and vulnerable if recession fears return.This is post #2 in our Hidden Exposures series: real-world examples where bottom-up trades carry top-down baggage.

Download the full breakdown below via PDF