Find an example (e.g., a hedge fund, a mutual fund, an ETF, or a specialty fund) and explain how its investment strategy is related to factors and arbitrage. What factors does it consider? How are they used to take advantage of (maybe not-so-perfect) arbitrage opportunities?

Factors are Roll and Ross (1986) and the famous Fama-French three factors (later extended to four and five factors by other researchers).

The original idea of hedge funds was based on arbitrage.

In investment industry applications, dozens of factors may be used to evaluate and position portfolios, often in conjunction with arbitrage strategies.