10 Strategies Hedge Funds Use to Make Huge Returns

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6. Relative-Value Arbitrage

Relative-value arbitrage is one of the 10 strategies hedge funds use to make huge returns. Following this strategy, a hedge fund manager invests in a pair of correlated securities, such as stock and bond. When the prices of the two securities deviate, that one security increases in value and the other one decreases in value, the investor purchases one security and shorts the other one, till the prices become converged again.

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