- A diversifier will be a hedge fund that will lower volatility based on its lower correlation with the overall portfolio. Its objective is to increase the long-term Sharpe ratio.
- The complement hedge fund will be one that provides value-added or diversification relative to a specific asset or a concentrated portfolio. It attempts to exploit conditional correlation.
I could say that a hedge fund could be a macro diversifier or a micro diversifier. The micro diversifier or complement is a alternative that acts like a partial hedge for specific asset or pool of assets. The macro diversifier's benefit will always be in the context of what happens to overall portfolio's return to risk and not how it will interact with specific asset or situation.