Hedging on Hedge Funds (postscript on correlations, beta, and “alpha”)Guest Post
Hedging on Hedge Funds (postscript on correlations, beta, and “alpha”) by Cliff Asness
After my last piece on hedge funds I’ve gotten a lot of questions that often come down to the issue of “beta” versus “correlation” with the market and, more generally, about “alpha.” I thought I’d share a version of my typical response.
First, in response to many otherwise good questions that I think confuse correlation with beta, they are not the same. As an example . . .
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