Pure arbitrage refers to the investment strategy above, in which an investor simultaneously buys and sells a security in different markets to take advantage of differences in price. Global macro is another investment strategy related to arbitrage, but it’s considered a different approach because it refers to investing in economic changes between countries.Ĭheck out our video on arbitrage below, and subscribe to our YouTube channel for more explainer content! There are several types of arbitrage, including pure arbitrage, merger arbitrage, and convertible arbitrage. Arbitrage is commonly leveraged by hedge funds and other sophisticated investors. While price differences are typically small and short-lived, the returns can be impressive when multiplied by a large volume. DOWNLOAD NOWĪrbitrage is an investment strategy in which an investor simultaneously buys and sells an asset in different markets to take advantage of a price difference and generate a profit. Here's an overview of arbitrage, including a look at three types you should know: pure arbitrage, merger arbitrage, and convertible arbitrage.įree E-Book: A Manager's Guide to Finance & AccountingĪccess your free e-book today. To effectively include arbitrage in your alternative investment strategy, it’s critical to understand the nuances and risks involved. These strategies often differ from the typical “buy and hold” tactics leveraged by most long-term stock and bond investors-and are usually more complicated.Īrbitrage is one alternative investment strategy that can prove exceptionally profitable when leveraged by a sophisticated investor. In the world of alternative investments, there are several strategies and tactics you can employ.
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