Risk Arbitrage Strategy Definition

Risk Arbitrage Strategy

Hedge Fund Strategy Explanation: Risk Arbitrage Strategies

Risk arbitrage hedge fund strategies usually involve purchasing stocks of companies that are likely takeover targets, while assuming short positions in the would-be acquiring companies. Risk arbitrage hedge fund managers can employ an event-driven investment strategy or merger arbitrage investment strategy, seeking situations such as hostile takeovers, mergers and leveraged buyouts. Such funds typically experience moderate amounts of volatility. Technically arbitrage is riskless but this is not realistic, the amount of risk taken on within each arbitrage situation is decided by the portfolio management team and traders.

Additional Risk Arbitrage Resources:

1. 54 Page Risk Arbitrage White Paper
2. Arbitrage PowerPoint Presentation
   
3. Older White Paper on Risk Arbitrage in Takeovers
4. Harvard Business Risk Arbitrage Research Piece
5. Limited Risk Arbitrage Portfolio Management Approach White Paper
   

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Permanent Link: Risk Arbitrage Hedge Fund Strategy
Related Terms: Risk Arbitrage, Risk Free Arbitrage, Zero Risk Arbitrage, Risk Arbitrage Definition and Explanation, Arbitrage Trading, ADR Arbitrage, Arbitrage Risks