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StockNews.com
Business
Tim Biggam

How To Pare Down The Risk And Pump Up The Profits With A Pairs Trade Approach

Alfred Winslow Jones is widely credited with creating the first hedge fund, or more accurately  "hedged fund", in the late 1940s.He supposedly got the idea while researching a markets article for Fortune magazine.

The idea was pretty basic-create a hedge, or pairs trade, by shorting stocks he thought would drop in value while buying stocks he thought would head higher. It is called a pairs trade since both the bullish and bearish trade are done simultaneously-or paired together.

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