Relative value is the attractiveness measured in terms of risk

Financial risk

Financial risk an umbrella term for multiple types of risk associated with financing, including financial transactions that include company loans in risk of default. Risk is a term often used to imply downside risk, meaning the uncertainty of a return and the potential for financial loss...

, liquidity

Market liquidity

In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value...

, and return

Rate of return

In finance, rate of return , also known as return on investment , rate of profit or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or...

 of one instrument relative to another, or for a given instrument, of one maturity relative to another. The term is used in economics

Economics

Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

, business or investment.

In hedge funds

Some hedge funds engage principally in arbitrage

Arbitrage

In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...

 strategies in the global equity and corporate debt markets by taking advantage of mispricings between two related and often correlated securities. Typical arbitrage strategies include: fixed income arbitrage, convertible bond arbitrage, statistical arbitrage

Statistical arbitrage

In the world of finance and investments, statistical arbitrage is used in two related but distinct ways:* In academic literature, "statistical arbitrage" is opposed to arbitrage. In deterministic arbitrage, a sure profit can be obtained from being long some securities and short others...

, and derivative arbitrage.

See also

• Resource-Based Relative Value Scale
  Resource-Based Relative Value Scale
  Resource-based relative value scale is a schema used to determine how much money medical providers should be paid. It is partially used by Medicare in the United States and by nearly all Health maintenance organizations ....
  
  
• Relative Value of Growth