Statistical Arbitrage

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DEFINITION of 'Statistical Arbitrage'

A profit situation arising from pricing inefficiencies between securities. Investors identify the arbitrage situation through mathematical modeling techniques.

INVESTOPEDIA EXPLAINS 'Statistical Arbitrage'

Statistical arbitrage is not without risk; it depends heavily on the ability of market prices to return to a historical or predicted normal.

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RELATED FAQS
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    A merger affects the shareholders of both companies in different ways and is influenced by several factors, including the ... Read Full Answer >>
  2. How do I find positive correlation in the stock market?

    Positive correlation refers to a statistical relationship in which two variables generally move in the same direction together. ... Read Full Answer >>
  3. Is there a way to profit from arbitrage trades on delivery duty paid?

    It is not possible to profit on Delivery Duty Paid (DDP) in arbitrage trades since DDP is not bought and sold; it is just ... Read Full Answer >>
  4. Is it a good idea for a beginning investor to arbitrage the dividend calendar?

    Because of the complexity of the trading strategy that seeks to arbitrage the dividend calendar and the level of risk involved, ... Read Full Answer >>
  5. What models should I use to make arbitrage trades?

    There is no universally accepted arbitrage trade system; take the time to understand which models work best in your target ... Read Full Answer >>
  6. What skills should I acquire to take advantage of arbitrage trading?

    The primary skills required for an arbitrage trader are the ability to research and speculate, good risk management, observation ... Read Full Answer >>
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