Barclays Capital provides an overview of the equity derivatives flows and products that contribute to dealers' correlation exposures, presenting several strategies that allow investors, of all types, to take advantage of the resultant opportunities
One of the most talked-about metrics in the world of equity derivatives currently is correlation. While the basic intuition behind the metric is quite straightforward, correlation risks and exposures can be significant. Indeed, dealers have focused much time and effort into managing correlation risk. Moreover, many of these efforts have been aimed at isolating this risk to make it more efficient to trade.
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