Market neutral: related pages

The alpha of a security or fund is its out-performance over the risk adjusted return, with risk measured by beta.

The excess of actual return over the level of return that would be expected given the riskiness of a portfolio.

An absolute return is the actual amount of money made by an investment ; the actual gain as a percentage of the amount invested.

An arbitrage strategy that exploits inconsistencies between currency depreciation and differences in interest rates.

The delta of a derivative can be used to hedge a holding of the derivative with a position in the underlying security or vice-versa.

A hedge constructed using both the delta and gamma of a portfolio. A gamma hedge needs less frequent re-balancing than a delta hedge.

Long and short positions in (classically two) different securities that have strongly correlated price movements.

A market neutral trading strategy based on expected reversions to past relationships between securities prices.

An options trading strategy that makes a profit on large movements either way in price of the the underlying security.