Key Characteristic of Long/Short Equity Strategy

Equity hedge funds are a diverse segment of the alternative investments industry, employing various strategies to capitalize on movements in the equity markets. One common strategy within equity hedge funds is known as 'long/short equity.' In this approach, fund managers take long positions in stocks they believe will increase in value while taking short positions in stocks they expect will decrease in value. This strategy allows managers to potentially profit in both rising and falling markets.

Given this context, consider the following statement regarding equity hedge fund strategies:

Which of the following best describes a key characteristic of the long/short equity strategy employed by equity hedge funds?