Relative Value trade16 May 2025 17:10
I was reading on this or other bb about Marshall Wace 1.5% short . They have always played this so nothing too new.
I may have explained this a while back already but given these bbs refresh too fast I'll do it again
MW is not outright shorting HOC . most likely this is just a relative value trade. Marshal is mostly likely aiming to capitalise on the price differential between gold (the commodity) and the stock of a gold mining company, in this case HOC, rather than betting on the absolute direction of either asset. This strategy is often referred to as a pairs trade for those who trade its obvious. MW is exploiting a perceived mispricing or divergence in the relationship between gold and the gold miner’s stock. They probably doing on a basket of shares that show this characteristic.
We can see it today again gold down 1,7% HoC down over 5.9% Gold miners like Hochschild typically have a high beta relative to gold So the relative value trade of being long gold and short Hochschild Mining is profitable today because Hochschild’s stock fell 5.94%, underperforming gold’s 1.7% decline by 4.24%. This spread generates a net gain (e.g., ~$424 per $10,000 dollar-neutral position)
IF that makes sense