EMM in more illiquid markets

nikol · Post by **nikol** » Thu Jun 13, 2019 3:23 pm

That statement is too broad to give you one simple ref. Let's narrow your "bit".

Where do you fail?:

- beta is volatility

- volatility is risk

- risk is uncertainty

- price of the risk

- price-in risk

- risk-neutrality

tradeking · Post by **tradeking** » Thu Jun 13, 2019 4:45 pm

That's an interesting take on beta, nikol, but I think when tbretagn said "beta products" he could have been simply referring to using more liquid correlated instruments as a hedge.

nikol · Post by **nikol** » Thu Jun 13, 2019 4:55 pm

Correlated instruments as a hedge is delta to me, no?

If Jurassic is confused in this, then I confess that I am the source of confusion.

tradeking · Post by **tradeking** » Thu Jun 13, 2019 4:57 pm

The terminology changes depending on domain. You are probably coming from the options world. In equities, you hedge out the "beta" exposure for illiquid stocks using SPY/ES.

nikol · Post by **nikol** » Thu Jun 13, 2019 5:01 pm

> The terminology changes depending on domain.

Given the fact that I am from 'risk domain' and we don't know the domain of Jurassic (hope not Mesozoic), the original message is hard to decode. ))

ronin · Post by **ronin** » Fri Jun 14, 2019 8:50 am

> In equities, you hedge out the "beta" exposure for illiquid stocks using SPY/ES.

Well. Beta and delta isn't the same thing. Sometimes, not even close.

tradeking · Post by **tradeking** » Fri Jun 14, 2019 11:41 am

Who said they were the same?

nikol · Post by **nikol** » Fri Jun 14, 2019 11:46 am

Delta-hedge of volatility (here "beta") exposure makes sense, yes. It is in fundamentals.

But again, the language is really confusing.