Relative Value Strategies long, why, industry, relative, someone

Howd

Can someone explain to me why a hedged equity would not be considered a relative value strategy but convertible arbitrage and equity market neutral would be? To me hedged equity is long short except you're not long/short securities in the same industry like market neutral....

Valores

include equity market neutral, convertible arbitrage, and hedged equity

mar350

Schweser 3-day workshop question book says hedged equity is NOT relative value strategy....is it wrong?

justin88

check your book ...

Zestt

"Relative value, in which the manager seeks to exploit valuation discrepancies through long and short positions. This label may be used as a supercategory for, for example, equity market neutral, convertible arbitrage, and hedged equity."

ll11

Market neutral is relative value as you hedge out the systematic component and pick weaker / stronger ones (eg you are buying bank of America selling citi). Equity long short does not necessarily hedge out systematic risk (beta can be non-zero) so technically you're not making proper relative value trades

justin88

That's how i understood it too...thanks. I guess Schweser is wrong!