Bridge over ocean
1 September 1992 Financial Analysts Journal Volume 48, Issue 5

The Generality of Long-Short Equitized Strategies

  1. C.B. Garcia
  2. F.J. Gould

The long-short equitized strategy (often called a hedged portfolio with futures overlay) can increase an investor's opportunities to exploit market inefficiency. Both the supply of and the demand for the strategy have sharply increased in the recent past. What is not widely understood, however, is that there is no single long-short equitized strategy. The concept is generic, encompassing a spectrum of strategies with significantly varying risk/reward characteristics. As a result, the user may encounter considerably more volatility than was initially expected.

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