kaal:claim:2748096-018

Market-neutral arbitrage strategies implicitly minimize systemic risk, because funds using them construct returns that do not depend on the direction of the market.

Source quote, verbatim

However, because many hedge funds engage in some form of market-neutral arbitrage to ensure that returns do not depend on the direction of the market, they may implicitly minimize systemic risk.

From

Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016), Risk-Management Incentives, p. 7
https://ssrn.com/abstract=2748096 · source PDF

Cite as

Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096

Holds when

applies only to funds running some form of market-neutral arbitrage

Classification

mechanismsupport: assertedeconomicssystemic-riskrisk-and-incentives

Verify

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Attestation record: colloquium/attestations/31e5236d7c8ba55b...json
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