Understanding Equity Hedge Strategy

Easy Hedge Fund Strategies Equity Hedge

In the world of hedge funds, various strategies are used to achieve positive returns regardless of market conditions. One of these strategies is called 'Equity Hedge'. This strategy primarily involves taking long positions in equities while simultaneously hedging risk with short positions. It aims to capitalize on relative pricing discrepancies in equities.

Which of the following statements best describes the Equity Hedge strategy?

It primarily involves investing in long-only equity positions to maximize capital appreciation.

It consists of taking long equity positions paired with short positions to manage risk while seeking alpha.

It focuses on fixed income investments while using equity derivatives to enhance returns.

Hint

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