This is a stock picker's world because the dispersion of returns is abnormally high and correlation across stocks is unusually low. Finally, market volatility is below normal. The dispersion tells us there is a lot of differentiation across stocks, so if you find winners and avoid losers, you will be rewarded for your work. This is reinforced by the low correlation. The comovement across stocks is low, so they are not driven by a single factor. There is no current macro driver driving stocks to move together.
We should see this reflected in the performance of hedge fund alpha, especially in long/short and market-neutral strategies.
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