Tell me more ×  How would one go about cloning/replicating
returns of a hedge fund or a strategy. That is given a return
series of the object to be clone, is it possible to decompose
return and reconstruct another different passive strategy that
generates return that are correlated above 75%+? Perfect
replication is definitely not possible, but I wanted to
understand the process and possibly the success people have had
in this area.  My initial thought on such subject would be to
decompose its return using factor models...  Some pictures
(source: bwater): Edit: 2012-12-14enter image description here
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Reliable 75%+ correlation is definitely not possible for the
vast majority of hedge fund types. –  Jase Dec 13 '12 at 3:26 i
beg to differ, there are lot of hedge funds that are dominated
by beta rather than alpha. B-water did two piece of analysis and
found that excess hedge fund return is practic