Hedge Funds interview preparation

Questions

100

Traced to a firm

39

Firms

16

Updated

September 2026

Asked at

All firmsMan Group10Balyasny Asset Management7Bridgewater Associates3DED.E. Shaw3Apollo Global Management2KKR2Oaktree Capital Management2Point722SCSquarepoint Capital2ACAQR Capital Management1BGBaupost Group1Coatue Management1HPS Investment Partners1Northern Trust1Viking Global Investors1Wolverine Trading1

Topic

All topicsStrategy taxonomy8Stock pitch10Short selling6Portfolio construction8Risk and drawdown8Performance and alpha7Event-driven and merger arb8Distressed and credit5Fund structure and economics7Financing, NAV and operations6Compliance and research process5Quant and systematic6India and Category III AIFs5Career and fit11

Level

AnyCoreIntermediateHard

Type

AnyTechnicalMarket viewBrainteaserCaseFit

1. 081Two series can be negatively correlated within each month but positively correlated over a full year. How?Quant and systematicHardtechnicalSCSquarepoint CapitalHedge Fund · Montreal · 2024

   Say this

   Because correlation measured within groups and correlation measured across the pooled data answer different questions. If both series share a common upward trend across months, the between-month variation is positive and can dominate the negative within-month relationship. It is Simpson's paradox in a time series.

   Then walk it

   1. Decompose the covariance into within-group and between-group parts. Total covariance equals the average within-month covariance plus the covariance of the monthly means. Those two terms can have opposite signs, and whichever has more variance wins the pooled number.
   2. Concrete picture: every month, A and B move in opposite directions day to day, so within-month correlation is negative. But each month both drift higher, so the monthly averages rise together. Pool the daily data over a year and the shared drift dominates.
   3. The generic driver is a common slow-moving factor. Both series load positively on something persistent, such as inflation, liquidity or a market trend, while their high-frequency innovations offset. Long-horizon correlation is dominated by the common factor and short-horizon correlation by the idiosyncratic part.
   4. There is also a pure measurement version of this: correlation of returns is horizon dependent when returns are autocorrelated. Compute correlation on daily returns and on annual returns for the same pair and you generally get different numbers, and neither is wrong.
   5. Why it matters practically, which is what the interviewer is really testing: hedge ratios and diversification estimated at one horizon do not hold at another. A pair that looks hedged on daily data can be a directional bet over a year, which is exactly how a relative value book acquires an unintended factor exposure.
   6. So the answer to 'which correlation is right' is neither. You choose the horizon that matches your holding period and your rebalancing frequency, and you look at both to know which part of the relationship you are actually trading.

   Where candidates lose it

   Treating it as a paradox to be resolved rather than a decomposition to be stated. Write down the within-plus-between covariance split and the answer is immediate. And do not stop at the maths: the reason they ask is the practical consequence for hedge ratios at different horizons.

   Expect next

   • Which correlation would you use to set a hedge ratio?
   • How does return autocorrelation affect measured correlation?
   • Give me another example of Simpson's paradox in markets.

   Reported by candidates at Squarepoint Capital (Hedge Fund, Montreal, 2024). Source: Wall Street Oasis.

2. 083What is the angle between the hands of a clock at 3:15?Quant and systematicCorephone / first roundMan GroupEquity Hedge · London · 2016

   Say this

   7.5 degrees. The minute hand is exactly at 90 degrees, but the hour hand has moved a quarter of the way from 3 towards 4, which is a quarter of 30 degrees, so it sits at 97.5. The difference is 7.5.

   Then walk it

   1. Set up the units once and the whole family of these questions becomes trivial. The hour hand moves 360 degrees in 12 hours, so 0.5 degrees per minute. The minute hand moves 360 in 60 minutes, so 6 degrees per minute.
   2. Positions from 12 o'clock: minute hand is 15 times 6, which is 90. Hour hand is 3 times 30 plus 15 times 0.5, which is 90 plus 7.5, so 97.5.
   3. Difference is 7.5 degrees, and it is the smaller of the two angles, which is what the question means unless it says otherwise.
   4. The general formula worth memorising: the angle equals the absolute value of 30 times hours minus 5.5 times minutes. At 3:15 that is 90 minus 82.5, which is 7.5.
   5. The whole trap is the hour hand. Candidates say zero because they picture the hour hand parked on the 3. It is not; it moves continuously, and that is the entire point of the question.
   6. Say the answer, then say the setup in one line. In a phone screen this question is testing whether you can be quick and precise about a small thing, so do not over-narrate.

   Where candidates lose it

   Answering zero. It is by far the most common response and it comes from forgetting that the hour hand moves continuously. Also, say which angle you are giving, the smaller one, and do not spend ninety seconds deriving a formula the interviewer already knows.

   Expect next

   • When is the next time the hands overlap exactly?
   • How many times a day do the hands form a right angle?
   • What is the angle at 9:45?

   Reported by candidates at Man Group (Equity Hedge, London, 2016). Source: Wall Street Oasis.

3. 084I roll two fair dice. What is the probability the sum is 7, and what is the probability of at least one six?Quant and systematicCorephone / first roundWolverine TradingEquity Hedge · Chicago · 2025

   Say this

   A sum of 7 is 6 out of 36, so one in six. At least one six is 1 minus the probability of no sixes, which is 1 minus 25 over 36, so 11 out of 36, a bit under a third.

   Then walk it

   1. Count the sample space first: 36 equally likely ordered outcomes. Ordered matters, and treating the dice as indistinguishable is the classic way to get these wrong.
   2. Sum of 7 has six combinations: 1-6, 2-5, 3-4, 4-3, 5-2, 6-1. So 6 over 36, which is one in six. Worth knowing that 7 is the most likely sum, and the distribution of sums is a triangle peaking at 7.
   3. For at least one six, use the complement. No six on either die is 5 over 6 times 5 over 6, which is 25 over 36. So at least one six is 11 over 36, about 30.6 percent.
   4. Note why it is not 2 over 6. Adding the two individual probabilities double counts the double six, so you subtract it: 6 over 36 plus 6 over 36 minus 1 over 36 equals 11 over 36. Inclusion-exclusion gives the same answer and it is worth saying both ways.
   5. The general rule that follows: for at least one of anything, go to the complement. It converts a messy union into a product, and it is the single most useful reflex in dice and coin questions.
   6. Then the standard follow-up they are setting up: given the sum is 7, the probability that one die is a 6 is 2 out of 6, so one third, because conditioning restricts the sample space to the six ordered pairs. Answer these fast and cleanly, and say the fraction before the decimal.

   Where candidates lose it

   Saying 2 over 6 for at least one six, which double counts the double six. And treating the dice as unordered, which wrecks the sample space. Say 'complement' out loud and do the arithmetic in fractions. At a prop shop these are timed, so speed and a clean statement of the sample space matter as much as the answer.

   Expect next

   • Given the sum is 7, what is the probability one die shows a 6?
   • What is the expected number of rolls until you see a six?
   • I pay you the sum of the dice. What would you pay to play?

   Reported by candidates at Wolverine Trading (Equity Hedge, Chicago, 2025). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.