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Absolute Return Index

What is 'Absolute Return Index'

A stock index designed to measure absolute returns. The absolute return index is actually a composite index made up of five other indexes. This index is used to compare the absolute returns posted by the hedge fund market as a whole against individual hedge funds.

Explaining 'Absolute Return Index'

The hedge fund absolute return index (HFRX) measures the comprehensive overall returns of hedge funds. Since hedge funds explore unique investment strategies and seek to obtain absolute returns rather than focus on beating the benchmark, the HFRX is representative of all hedge fund strategies.
 

Absolute Return Index FAQ

What is absolute return rate?

Absolute return is the return that an asset accomplishes over a predefined period. This measure takes a gander at the depreciation and appreciation, communicated as a percentage, that an asset, for example, a stock or a shared asset, accomplishes over a given period.

How do you calculate absolute return?

Absolute return, also called Point-to-Point Returns is the increase or decrease that an investment achieves over a stated period. It is expressed in percentage terms, i.e. Absolute returns = 100* (Selling Price – Cost Price)/ (Cost Price)More items.

What is absolute return example?

The total return is the least difficult return metric that is utilized to measure how much increase or loss has been achieved from an investment. For instance, in the event that you had contributed $3500 of every asset and reclaimed when the worth was $4100, you would have made an increase of $.

What is absolute and relative return?

Absolute return is the increase or decrease that an investment achieves over a stated period. While Relative return is the difference between the absolute return and the performance of the market, which is measured by a benchmark, such as the S&P 500.

Further Reading


Modelling the absolute returns of different stock indices: exploring the forecastability of an alternative measure of risk
onlinelibrary.wiley.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

Method and system for construction of a passive absolute return indexMethod and system for construction of a passive absolute return index
patents.google.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

The myth of the absolute-return investorThe myth of the absolute-return investor
www.tandfonline.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

A VaR Black–Litterman model for the construction of absolute return fund-of-fundsA VaR Black–Litterman model for the construction of absolute return fund-of-funds
www.tandfonline.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

Absolute return portfoliosAbsolute return portfolios
www.sciencedirect.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

The Anatomy of Principal-Protected AbsoluteReturn Barrier NotesThe Anatomy of Principal-Protected AbsoluteReturn Barrier Notes
jod.pm-research.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

Return-based classification of absolute return fundsReturn-based classification of absolute return funds
link.springer.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …

Absolute returns in commodity (natural resource) futures investmentsAbsolute returns in commodity (natural resource) futures investments
www.sciencedirect.com [PDF]
… iles:quantiles "of the absolute returns#[ For the ARCH!like model we follow a somewhat conventional approach and _rst … the issue of {volatility of volatility|[3 We applied both models to the daily absolute return of the three stock indices] the Hang Seng Index the Nikkei 114 …



Q&A About Absolute Return Index


What do absolute return managers tend to use?

Short selling, leverage, and high turnover in their portfolios.

What is the Absolute Return Index?

The Absolute Return Index is a stock index designed to measure absolute returns.

Why was this index created?

This index was created to help investors determine how well their investments in hedge funds are performing compared to other investment options.

Who uses this index and why do they use it?

Investors use this index because it allows them to see how their investments in hedge funds are performing compared to other investment options.

What does absolute return have to do with stock funds?

Stock funds are not allowed short selling because it can be risky for investors if they don't know what they're doing. They also cannot take advantage of leverage because it could cause them to lose money quickly if something goes wrong with their investments.

How does an investor make money using an absolute return strategy?

By taking advantage of opportunities that other types of investors may miss out on due to restrictions on how they can invest their money . For example , some investors might think that stocks will go down when interest rates rise , but others might see this as an opportunity . If you were using an absolute return strategy , you would buy stocks when interest rates rose because you thought they would go up even more . You could then sell your stocks later at a higher price than you bought them for . This way , no matter what happened with interest rates , you would still make money from your trade . Another example might be buying

What is the HFRX?

The HFRX measures comprehensive overall returns of hedge funds.

How does the HFRX compare against individual hedge funds?

This index compares the absolute returns posted by the entire hedge fund market against individual hedge funds.