Multiple Arbitrage


 

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Multiple Arbitrage

In the context of hedge funds, a style of management where by the fund employs more than one arbitrage strategy. Portfolio manager opportunistically allocates capital among the various strategies in order to create the best risk/reward profile for the overall fund. Common strategies include merger arbitrage, convertible arbitrage, fixed income arbitrage, long/short equities pairs trading, and volatility arbitrage. In the context of equity and private equity investment, this refers to an investment in a firm where by standard multiples (earnings/price, book/price) indicate the price is far cheaper than industry averages.



Multiple Arbitrage

Similar Matches

Index arbitrage

Index arbitrage

An investment/trading strategy that exploits divergences between actual and theoretical futures prices. An example is the simultaneous buying (selling) of stock index futures (i.e., S&P 500) while selling (buying) the underlying stocks of that index, capturing as profit the temporarily inflated basis between these two baskets. Often, the point at which profitability exists is expressed at the block call as the number of points the future must be over or under the underlying basket for an arbitrage opportunity to exist. See: Program trading.


Arbitrage bonds

Arbitrage bonds

Municipality issued bonds issued intended to gain an interest rate advantage by refunding a higher-rate bond in ahead of their call date. Lower-rate refunding issue proceeds are invested in Treasuries until the first call date of the higher-rate issue.


Arbitrage

Arbitrage

A combination of transactions designed to profit from an existing discrepancy among prices, exchange rates, and/or interest rates on different markets without risk of these changing. Simplest is simultaneous purchase and sale of the same thing in different markets, but more complex forms include triangular arbitrage and covered interest arbitrage.


Tax arbitrage

Tax arbitrage

Trading that takes advantage of a difference in tax rates or tax systems as the basis for profit.


Arbitrage

Arbitrage

The simultaneous purchase and sale of two different, but closely related, securities to take advantage of a disparity in their prices. Alternatively, the purchase and sale of the same security in different markets.Originally, most arbitrage occurred in the currency markets: arbitrageurs would buy in one market and sell in another. Nowadays, the practice applies equally to commodities, futures and stocks. For instance, if a company is dual-listed on two stock exchanges, and the prices are at variance, an arbitrageur has an opportunity to buy in one market and sell in another before the disparity is closed.


Further Suggestions

Currency arbitrage
One-way arbitrage
Special arbitrage account
Merger Arbitrage
Covered interest arbitrage
Triangular arbitrage
Structured arbitrage transaction
Locational arbitrage
arbitrageur
Discount Arbitrage
Arbitrage free option pricing models
Convertible Arbitrage
Covered interest arbitrage
Arbitrage Trading Program (ATP)
Risk controlled arbitrage
conversion arbitrage
Triangular arbitrage
Arbitrageur
Riskless arbitrage
Reversal Arbitrage
International arbitrage


 
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