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Multiple Arbitrage |
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Multiple ArbitrageIn 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 MatchesRiskless arbitrageRiskless arbitrageThe simultaneous purchase and sale of the same asset to yield a profit. Index arbitrageIndex arbitrageAn 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. One-way arbitrageOne-way arbitrageThe use, by a potential supplier or demander in a market, of a different market or markets to accomplish the same purpose, taking advantage of a discrepancy among their prices. With transaction costs, this enforces smaller price discrepancies than would be permited by conventional arbitrage. Due to Deardorff (1979). ArbitrageArbitrageA 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. Merger ArbitrageMerger ArbitrageIn the context of hedge funds, a style of management that involves the simultaneous purchase of stock in a company being acquired and the sale of stock in its acquirer. Further SuggestionsArbitrageurArbitrage Trading Program (ATP) Arbitrage bonds arbitrage Covered interest arbitrage Currency arbitrage Locational arbitrage Arbitrage free option pricing models Triangular arbitrage arbitrageur Convertible Arbitrage International arbitrage Risk controlled arbitrage Triangular arbitrage Special arbitrage account Reversal Arbitrage Discount Arbitrage conversion arbitrage Covered interest arbitrage Structured arbitrage transaction Tax arbitrage |
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