Statistical arbitrage

Statistical arbitrage
Statistical arbitrage is not true arbitrage because it does not deliver a guaranteed profit — in fact many statistical arbitrageurs have made large losses. The term is often shortened to statarb.

Statistical Arbitrage typically uses systematic models to build long and short portfolios with different current prices that the market is statistically predicted to price equivalently.
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Statistical arbitrage is also subject to model weakness as well as stock- or security-specific risk.

Statistical Arbitrage
Definition: [crh] In the context of hedge funds, a style of management that employs complex statistical models that try to capture small abnormalities in a security's intraday returDefinition: n.

statistical arbitrage.
The former is a strategy that emphasizes fundamental stock picking. A portfolio of long and short positions is maintained to be beta neutral.

Examples of alternative investment strategies are: long--short equity, event driven, statistical arbitrage, fixed income arbitrage, convertible arbritage, short bias, global macro, and equity market neutral.

An arbitrageur might participate in risk-free arbitrage (true arbitrage) or an arbitrageur might be involved in risk arbitrage (statistical arbitrage).

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the meaning to include any attempt to buy a relatively underpriced item and sell a similar, relatively overpriced item, expecting to profit when the prices resume a more appropriate theoretical or historical relationship (statistical arbitrage).

Equity market neutral Â- Fixed income arbitrage Â- Convertible arbitrage Â- Statistical arbitrage Â- Volatility arbitrage Â- Capital structure arbitrage
Event driven
Merger arbitrage / Risk arbitrage Â- Distressed securities Â- Activist shareholder ...

A longitudinal measure in which the process generating returns is identical over time.
Statistical Arbitrage ...

statistical arbitrage An attempt to profit from pricing inefficiencies that are identified through the use of theoretical mathematical models.

See also: Hedge fund, Market neutral, Equity market, Risk arbitrage, Short Sale