A hedge fund is a partnership between a professional fund manager and investors. The manager and investors pool money into a fund, using different strategies to grow it.
While there are hundreds of strategies employed by hedge funds to generate returns for their investors, most can be grouped into four main categories: – Global macro – Directional – Event-driven – Relative value
An event-driven hedge fund strategy seeks to identify risks and opportunities in specific events and make trades that pay off if those risks or opportunities are realized.
Investopedia defines arbitrage as “the simultaneous purchase and sale of the same asset in different markets to profit from tiny differences in the asset’s listed price.