Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
Series Vol. 62 , 28 December 2023
Open
Access | Article
Exploring Hedge Fund Strategies in Portfolio Management Using Financial Derivatives and Their Impact on Market Volatility
* Author to whom correspondence should be addressed.
Abstract
This paper aims to explore the strategies employed by hedge funds when using financial derivatives for portfolio management and their impact on market volatility. It begins with a discussion of the importance of hedge funds in the investment world, followed by an examination of the strategies they employ, including the use of financial derivatives such as futures, options and swaps. In addition, the influence of these strategies on market volatility is also analyzed. This study provides valuable insights on hedge fund investment strategies and their impact on the market and has important reference value for investors and hedge fund managers. Hedge fund has attracted more and more attention in the investment field. Its unique strategy and high return ability make it highly valued in the investment community. This article takes an in-depth look at the strategies employed by hedge funds when using financial derivatives for portfolio management and explores the impact of these strategies on market volatility.
Keywords
hedge funds, derivatives, impact on market volatility
References
1. Ang, A., Gorovyy, S., & van Inwegen, G. (2011). Hedge fund leverage. Journal of Financial Economics, 102(3), 766-792.
2. Bae, K. H., Lins, K. V., & Richardson, M. (2016). Do hedge funds hedge? Review of Financial Studies, 29(8), 2081-2117.
3. Fung, W., & Hsieh, D. A. (1997). Empirical characteristics of dynamic trading strategies: The case of hedge funds. The Review of Financial Studies, 10(2), 275-302.
4. Fung, W., & Hsieh, D. A. (2001). The risk in hedge fund strategies: Theory and evidence from convertible arbitrage. The Journal of Empirical Finance, 8(2), 161-193.
5. Gatev, E., Goetzmann, W. N., & Rouwenhorst, K. G. (2006). Pairs trading: Performance of a relative-value arbitrage rule. The Review of Financial Studies, 19(3), 797-827.
6. Agarwal, V., Fung, W., & Loon, Y. C. (2015). Does derivative usage enhance hedge fund performance? Journal of Financial Economics, 116(3), 588-606.
7. Agarwal, V., Daniel, N., & Naik, N. Y. (2017). Do swaps impact hedge fund risk and return? Journal of Financial and Quantitative Analysis, 52(3), 1077-1112.
8. Alazri, W., Fletcher, J., & Ngo, T. (2018). Hedging and downside risk in hedge fund performance. Journal of Futures Markets, 38(7), 803-823.
9. Tufano, P., & Xu, Z. (2004). Do hedge funds trade on private information? Evidence from syndicated lending and short-selling. The Journal of Finance, 59(6), 2665-2693.
10. Yan, X., & Zhang, L. (2019). Do options trading strategies enhance hedge fund performance? Journal of Financial and Quantitative Analysis, 54(4), 1737-1762.
11. Brunnermeier, M. K., & Nagel, S. (2004). Hedge funds and the technology bubble. Journal of Finance, 59(5), 2013-2040.
12. Bussiere, M., Cheng, G., Chinn, M. D., & Lisack, N. (2015). For hedge funds, size matters, and so does age. Journal of International Money and Finance, 58, 63-85.
13. Kirilenko, A., Kyle, A. S., Samadi, M., & Tuzun, T. (2011). The flash crash: High-frequency trading in an electronic market. Journal of Finance, 66(3), 967-998.
14. Lo, A. W. (2004). The adaptive markets hypothesis: Market efficiency from an evolutionary perspective. Journal of Portfolio Management, 30(5), 15-29.
Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open Access Instruction).
- Volume Title
- Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
- ISBN (Print)
- 978-1-83558-225-1
- ISBN (Online)
- 978-1-83558-226-8
- Published Date
- 28 December 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/62/20231316
- Copyright
- 28 December 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited