Statistical Arbitrage

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Statistical Arbitrage

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 return.


An investment practice that attempts to profit from inefficiencies in price by making transactions that offset each other. For example, one may buy a security at a low price and, within a few seconds, re-sell it to a willing buyer at a higher price. Arbitrageurs can keep prices relatively stable as markets try to resist their attempts at price exploitation. Arbitrageurs often use computer programs because their transactions can be complex and occur in rapid succession.
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When Steven Zoernack and The Bullion Fund deploy their Statistical Arbitrage Strategy, the firm uses a heavily quantitative and computational approach to trading by utilizing a variety of automated trading systems which commonly make use of data mining, statistical methods and artificial intelligence techniques.
The firm's trading strategies include global macro trading, long/short, statistical arbitrage, event driven strategies and technical trading systems.
11% YTD and the HFN Statistical Arbitrage Average was +1.
5 million venture capital fundraising to develop quantitative trading systems for global equity and futures markets; co-directed a team of 20 for trading model development and system integration and testing; led a high-frequency, market-neutral statistical arbitrage fund; and designed a real-time portfolio monitoring and risk management system.
The data in the report is based on conversations with over 107 buy-side equity and equity options traders, drawn directly from in-depth, one-to-one interviews with long-only asset managers and hedge funds covering a wide range of strategies including long/short equity, statistical arbitrage, equity sector-focused, index funds, volatility and global macro.
As an innovator in the niche strategy of statistical arbitrage, Double Alpha is continually researching and implementing quantitative models which explain the short term volatility of individual equities.
Sondhi joins Chi-X Global from Nomura, where he worked in its Statistical Arbitrage Prime Services business.

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