[allyourhorses]

This is beta hedging, it works on the assumption that when SPY performs positively, your risky basket will outperform SPY, but if there is some systemic risk-off event, your SPY short will at least dampen if not fully cover any losses made in your risky basket

Good day, you lose -0.5% on SPY but gain +2% on AMC

Bad day, you maybe gain 0.5-1%% on SPY and lose -2% on AMC

[depaulagu]

But this is only true if expected returns and beta are constants, right?