What is a good sharpe for someone running 10-15 longs and 10-15 shorts sleeve? Does more positions mean it's easier to achieve higher Sharpe?

Based on the most helpful WSO content, here are some insights regarding Sharpe ratios and portfolio size:

1. Sharpe Ratio Considerations:

   • The Sharpe ratio is a measure of risk-adjusted return. A higher Sharpe ratio indicates better risk-adjusted performance.
   • For hedge funds, especially those with concentrated portfolios, achieving a high Sharpe ratio can be challenging due to inherent volatility.

2. Impact of Portfolio Size:

   • More positions do not necessarily mean it's easier to achieve a higher Sharpe ratio. The quality and correlation of the positions matter significantly.
   • A small portfolio (like your 20-30 stocks) can be more volatile, which might result in a lower Sharpe ratio despite good return percentages.

3. Strategies to Improve Sharpe Ratio:

   • Risk Parity Approach: Develop multiple themes with low correlation and invest in them to reduce overall portfolio correlation to US equity markets.
   • Volatility Management: Adjust position sizes based on volatility. Reduce positions when volatility rises and increase them when it drops.
   • Hedging: Use strategies like shorting the S&P or sector ETFs to manage portfolio correlation and beta.

4. Example from WSO:

   • Unhedged short volatility strategies tend to have higher Sharpe ratios most years. Limiting downside volatility by not hedging very out-of-the-money options can also help improve risk-return ratios.

In summary, while a larger number of positions can diversify risk, the key to a higher Sharpe ratio lies in managing volatility, correlation, and strategic hedging.

Sources: Difficulty Check, A Contrarian View - Raging Bull, A Contrarian View - Raging Bull, https://www.wallstreetoasis.com/forum/private-equity/blackstone-pe-culture?customgpt=1, Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role