relative value trading

A strategy that bets on the relationship between two correlated prediction market prices rather than the direction of either one, profiting when a mispriced spread converges.

Cluster: Liquidity & Trading

Related Concepts

• implied correlation — The degree to which related prediction market outcomes should move together based on economic logic, creating trading opportunities when markets price correlated events inconsistently.
• arbitrage — Exploiting price differences for equivalent outcomes across markets or platforms for risk-free profit.

Articles about relative value trading

• Prediction Markets and Implied Correlation by Jon Turek