SIE - Securities Industry Essentials Exam
An equity hedge fund is using a long / short strategy. Which of the following MAY be true of the hedge fund?
The fund will have a positive correlation to to the direction of the broad stock marketA
The fund will have a negative correlation to long term interest ratesB
The fund may have a negative correlation to the direction of the broad stock marketC
The fund may have holdings that include DPPsD
The fund's strategy is to be long and / or short stocks. Since they can short stocks, this could provide a negative correlation to the direction of the overall market.