Relative value is the attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or for a given instrument, of one maturity relative to another. The term is used in economics, business or investment.
In Hedge Funds
Some Hedge funds engage principally in arbitrage strategies in the global equity and corporate debt securities markets taking advantage of mispricings between two related and correlated securities. Typical arbitrage strategies include: fixed income arbitrage, convertible bond arbitrage, mortgaged-backed arbitrage and derivative arbitrage.
