Market Neutral Investing
Barron's Finance & Investment Dictionary:
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Market Neutral Investing
investing, such as that done by hedge funds, where the direction of the overall market does not affect profit or loss but gains are attempted as the result of market inefficiencies.
An example of market neutral investing is pairs trading, where two highly correlated trading vehicles are bought long and sold short at a moment when the pair’s price ratio has diverged. When the pair reverts to its normal price relationship, a profit is made on one or both sides.
An example of market neutral investing is pairs trading, where two highly correlated trading vehicles are bought long and sold short at a moment when the pair’s price ratio has diverged. When the pair reverts to its normal price relationship, a profit is made on one or both sides.
| Market Maker, Market Letter | |
| Market Opening, Market Order |
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Market Neutral Investing
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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