... management for hedge funds, the risk preferences of hedge fund managers and investors, and the apparent conflict between the Efficient Markets Hypothesis and the existence of the hedge fund industry. .. percent ©2005, The Research Foundation of CFA Institute The Dynamics of the Hedge Fund Industry Because of the dynamic nature of hedge fund strategies, their correlations are particularly unstable... 50.13) for details 16These ©2005, The Research Foundation of CFA Institute 21 The Dynamics of the Hedge Fund Industry Table 3.10 Autocorrelations of Mutual Fund and Hedge Fund Returns (monthly