Even some simple models can generate some (low) correlation with ~0 MMC (Like some sample scripts available online)
As long as the correlation is positive, the hedge fund pays out some money for these submission even though they will certainly not imporve trading performance of the hedge fund.
Why is it good for the hedge fund to pay for these low performing models?
While one low performing models certainly won’t break the bank, if 100s of weaks models show up, it can add up to a significant sum.
Maybe I just don’t understand the whole business model.
Can someone please help?