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.

Training Mode

Unit 1 Unit 2 Unit 3 Unit 4

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 market

The fund will have a negative correlation to long term interest rates

The fund may have a negative correlation to the direction of the broad stock market

The fund may have holdings that include DPPs