Relative strategies, broadly speaking, are closer to arbitrage. If buying a stock and selling it after a price increase is a one-dimensional strategy, then relative strategies are more of a two-dimensional approach. In theory, if you’ve balanced both sides of the trade properly, you can profit regardless of the overall market direction. For example: • Hedging: Suppose you short $100 of Asset A and go long $100 of Asset B. If the market crashes and both assets go to zero, your position nets ou...

Relative strategies, broadly speaking, are closer to arbitrage. If buying a stock and selling it after a price increase is a one-dimensional strategy, then relative strategies are more of a two-dimensional approach. In theory, if you’ve balanced both sides of the trade properly, you can profit regardless of the overall market direction. For example: • Hedging: Suppose you short $100 of Asset A and go long $100 of Asset B. If the market crashes and both assets go to zero, your position nets ou...