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In mathematical finance, a replicating portfolio for a given asset or series of cash flows is a portfolio of assets with the same properties (especially cash flows). This is meant in two distinct senses: static replication, where the portfolio has the same cash flows as the reference asset (and no changes need to be made to maintain this), and dynamic replication, where the portfolio does not ...
The proceeds from the sale of the futures help to offset paper losses of the owned portfolio. [3] This is similar to buying a put option in that it allows an investor to preserve upside gains but limits downside risk. [1] Portfolio insurance is most commonly used by institutional investors when the market direction is uncertain or volatile.
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The portfolio's delta (assuming the same underlier) is then the sum of all the individual options' deltas. This method can also be used when the underlier is difficult to trade, for instance when an underlying stock is hard to borrow and therefore cannot be sold short .
Investors can ease the effects of volatility. Volatility is more common as economists, market strategists and asset managers face hurdles in estimating future GDP and profit margins. Determining ...
Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio. [1] [2] Passive management is most common on the equity market, where index funds track a stock market index, but it is becoming more common in other investment types, including bonds, commodities and hedge funds.
Hedge fund replication is the collective name given to a number of different methods that attempt to replicate hedge fund returns. The hedge fund industry has boomed over recent years and various studies by investment banks as well as academic papers have shown that hedge funds may be nearing an alpha generating capacity constraint. [1]
Exchange-traded funds (ETFs) have been a staple of investors’ portfolios for decades, and for good reasons. They give investors the opportunity to own various types of securities in a single ...
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