Investing in Relationships    1

What Is Market Neutral?

Basic Concepts

Relationship Investing

Understanding Market-Neutral Approaches

WHAT IS MARKET NEUTRAL?

Market-neutral” investing refers to a group of investment strategies that seek to neutralize certain market risks by taking offsetting long and short positions in instruments with actual or theoretical relationships. These approaches seek to limit exposure to systemic changes in price caused by shifts in macro-economic variables or market sentiment.

The market-neutral and hedged strategies discussed in this book are: convertible arbitrage, fixed-income arbitrage, mortgage-backed securities arbitrage, merger arbitrage, equity market neutral, statistical arbitrage, relative value arbitrage, ...

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