I am having a hard time understanding the difference b/w net and gross exposures for long short equity funds.
Mathematically, net exposure is Long Percentage - Short Precentage.
Gross exposure is Long Percentage + Short Percentage.
I read Investopedia and other sources and some sources say that both net and gross exposures measure market risk. Other sources say that net exposure does not measure market risk but only gross exposure does. Which one is correct? Can someone please explain the difference between the two concepts in a simple example please?
Thank you very much