Column: Andrew Kasapis

As spreads on credit default swaps have widened dramatically there are evident correlation strategies that are making money for investors with the right view. Certain hedge fund investors who want to have long correlation exposure and expect implied correlation to increase and would like a strategy with positive carry are putting on directional correlation trades.

There are two basic types of long correlation strategy:

- Short position (buy protection) in senior tranche,

- Long position (sell

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