Asked by
Julie Campeggi
on Dec 08, 2024
Verified
Pairs trading is associated with
A) triangular arbitrage.
B) statistical arbitrage.
C) data mining.
D) triangular arbitrage and data mining.
E) statistical arbitrage and data mining.
Pairs Trading
A form of statistical arbitrage in which stocks are paired up based on underlying similarities and long/short positions are established to exploit any relative mispricing between each pair.
Statistical Arbitrage
A quantitative strategy that seeks to take advantage of price inefficiencies between related financial instruments by employing complex mathematical models.
Triangular Arbitrage
Triangular arbitrage is a risk-free trading strategy that takes advantage of a discrepancy between three foreign currencies in the foreign exchange market.
- Comprehend the variety of strategies employed by hedge funds and their implementation within financial markets.
- Understand the core principles and mechanisms behind statistical and pairs trading as strategies employed by hedge funds.
Verified Answer
SP
Learning Objectives
- Comprehend the variety of strategies employed by hedge funds and their implementation within financial markets.
- Understand the core principles and mechanisms behind statistical and pairs trading as strategies employed by hedge funds.