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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 MatchesReversal ArbitrageReversal ArbitrageA riskless arbitrage that involves selling the stock short, writing a put, and buying a call. The options have the same terms. ArbitrageArbitrageThe 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. Arbitrage bondsArbitrage bondsMunicipality 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. 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). International arbitrageInternational arbitrageSimultaneous buying and selling of foreign securities and ADRs to capture the profit potential created by time, currency, and settlement inconsistencies that vary across international borders. Further SuggestionsCurrency arbitrageTax arbitrage Arbitrageur Triangular arbitrage Triangular arbitrage Arbitrage Trading Program (ATP) Merger Arbitrage arbitrageur Structured arbitrage transaction conversion arbitrage Risk controlled arbitrage Arbitrage Convertible Arbitrage Index arbitrage Arbitrage free option pricing models Discount Arbitrage Covered interest arbitrage Locational arbitrage Covered interest arbitrage Special arbitrage account Riskless arbitrage |
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