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Hedge Funds Leverage Derivatives Arbitrage for Low-Risk Returns Amid Market Efficiency

Hedge Funds Leverage Derivatives Arbitrage for Low-Risk Returns Amid Market Efficiency

Published:
2025-11-06 13:39:02
17
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BTCCSquare news:

Derivatives arbitrage, once a straightforward pursuit of risk-free profits from price discrepancies, has evolved into a sophisticated game dominated by institutional players. Hedge funds now rely on advanced technology and vast capital to exploit fleeting opportunities, ensuring markets remain efficient while securing low-volatility returns.

The rise of computerized trading systems has all but erased traditional arbitrage opportunities for retail investors. Institutional strategies have shifted toward market-neutral and relative value trades, prioritizing Sharpe ratio optimization over pure risk-free gains. This evolution underscores the relentless march of financial innovation.

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