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Arbitrages – even of very small marginal size – could be exploited based on a large number of artificially intelligent program trading systems mining historical and currently released information for financial products and correlated factors. Using multiple signalling agents, aggregated signals can be calculated by weighting each agent based on the statistical strength of historical signal combinations. Using this type of design, it is easy to develop multiple agents that are completely independent and confidential. Multiple agents can be developed concurrently, tested, and introduced to the aggregate system at any rate.
The process of the elimination of arbitrage opportunities will create vast concentrations of wealth within the companies that embrace the tools that automate this process. As new information sources become available for analysis, new arbitrages may be identified with increasing complexity. The abstraction of trading systems to automaically test and integrate new data sources will mark the last decades of financially advantageous investment in hedge funds. After that time, return will be a stochastic function of expected risk.
Dan Von Kohorn 