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Arbitrage Hedge Fund / Risk Review

Arbitrage Risk Controls

Understand sizing, exposure, hedge, liquidity, resolution, and model-drift controls for the Polymarket-first Arbitrage Hedge Fund.

Monitoring Active
Controlled Access

Resolution Risk & Failure Modes

In arbitrage strategies, primary risk stems not from directional market movement, but from resolution delays and structural failure modes. The assumption of convergence relies on specific catalytic events and functional clearing mechanisms.

We classify resolution risk into three distinct vectors: Regulatory Intervention, Counterparty Default, and Model Drift. A failure in any vector can transform a perceived risk-free arbitrage into a directional exposure with asymmetric downside.

Mandatory Audit Trail

All risk parameter adjustments require logged review and approval.

Model Drift Deviation+1.2 sigma
Data Latency / Staleness14ms Avg
Feed A
Feed B
Feed C

Risk FAQ

How risk controls constrain product scope

Risk policy explains when a signal can move from monitoring toward sizing.

What is the core risk rule for the arbitrage fund?

A signal is not sized only because a spread exists. Sizing is constrained by confidence, liquidity, drawdown tolerance, venue concentration, hedge context, and event-resolution risk.

How does Ultramar handle model drift?

The risk process treats model drift as a failure mode that has to be monitored beside stale signals, liquidity changes, and ambiguous event resolution.

Why keep research strategies separate from risk-controlled product scope?

Research strategies should graduate only after data quality, risk limits, and allocator-facing language are complete enough to withstand review.