Blog Posts

Enhanced indexing is a strategy that looks to outperform a traditional index by making minor adjustments to its composition while maintaining a similar risk profile.  It combines passive and active management techniques to achieve better returns without significantly deviating from the original index’s structure.   Key Takeaways – Enhanced Indexing Strategic Adjustments Enhanced indexing involves […]

Alternative beta strategies – also known as “smart beta” or “factor investing” – is an approach to portfolio management that tries to capture market inefficiencies and enhance returns beyond traditional market-capitalization-weighted indices (i.e., indexing to the S&P 500 and the like). These strategies leverage various factors or styles to build portfolios that are systematically different […]

The crush spread is a trading strategy used in the commodities market – specifically within the agricultural sector. It involves the simultaneous purchase and sale of soybean futures and its derivative products, soybean meal and soybean oil, to exploit pricing inefficiencies and manage risk. This spread provides insights into the profitability of processing soybeans into […]

A synthetic short position is a trading strategy used to replicate the financial outcomes of a traditional short sale without actually borrowing and selling the underlying asset. This strategy is typically created using options and futures contracts. Below is a detailed explanation of synthetic short positions, their components, and how they function.   Key Takeaways […]

Sentiment arbitrage is a trading strategy that exploits the difference in market sentiment between various groups of traders/investors, typically retail and professional traders. By analyzing and predicting the sentiment, traders can decisions to capitalize on any discrepancies in market perceptions. The wider the divergence, potentially the greater the opportunity.   Key Takeaways – Sentiment Arbitrage […]

NAV Discount Arbitrage Trading is a specialized strategy used by traders to exploit the price discrepancies between the Net Asset Value (NAV) of a fund and its market price. This strategy is commonly applied to closed-end funds (a type of mutual fund that doesn’t continually issue new shares), where the market price of the fund […]

Multi-asset spread trading is a trading strategy involving the simultaneous buying and selling of different assets to capitalize on the price differences between them. This technique tries to exploit relative price movements rather than outright price direction. This makes it a popular approach among professional traders and hedge funds looking for non-correlation to traditional asset […]

Geopolitical events can create significant volatility in financial markets, which can impact asset prices, currency values, and overall trading returns.  To protect against these risks, traders use various hedging strategies.  This article takes a look at how these hedging strategies can reduce geopolitical risks.   Key Takeaways – Geopolitical Risk Hedging Strategies Diversify Portfolios Spread […]

Credit spread arbitrage is a trading strategy used in the fixed-income and derivatives markets, where a trader look to profit from the difference (spread) between two credit instruments. The strategy involves simultaneously buying and selling related securities to exploit price inefficiencies and differences in credit spreads. True credit spread arbitrage is trading price discrepancies between […]

Volatility arbitrage is a trading strategy that tries to profit from the difference between the forecasted or implied volatility of an asset and its actual future volatility.    Key Takeaways – Volatility Arbitrage Market Neutral Strategy Volatility arbitrage tries to profit from the difference between expected and actual volatility. Options are typically used to create […]