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Financial Risk Manager Part 2

Financial Risk Manager Part 2

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In finance, every risk is also an opportunity. The traders try to forecast changes in correlation and attempt to financially gain from these changes in correlation. What should a trader do, if he expects the correlation to rise in the future?

I. Enter correlation swaps as a party to pay realized correlation
II. Buying put options on an index and selling put options on individual components
III. Paying fixed in a variance swap on an index and receiving fixed on individual components

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