DEFINITION of 'Statistical Arbitrage'
A profit situation arising from pricing inefficiencies between securities. Investors identify the arbitrage situation through mathematical modeling techniques.
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BREAKING DOWN '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

What models should I use to make arbitrage trades?
Learn about different types of arbitrage models and techniques, and discover why classic arbitrage opportunities are very ... Read Answer >> 
How do I use the news to find arbitrage opportunities?
Learn what risk arbitrage trading is and how this type of arbitrage trading opportunity is available to individual retail ... Read Answer >> 
What are the biggest risks associated with covered interest arbitrage?
Investing money can be confusing for novice investors. Find out more about covered interest arbitrage and the risks that ... Read Answer >> 
What is the difference between arbitrage and hedging?
Dive into two very important financial concepts: arbitrage and hedging. See how each of these strategies can play a role ... Read Answer >> 
Is there a difference between financial spread betting and arbitrage? (AAPL, NFLX)
Find out more about financial spread betting, arbitrage and the differences between financial spread betting and the arbitrage ... Read Answer >> 
What is the difference between arbitrage and speculation?
Arbitrage and speculation are very different strategies. Arbitrage involves the simultaneous buying and selling of an asset ... Read Answer >>