As opposed to an outright position where both names are on the long side and there would be a profit and loss offset, a negative correlation between the two names can cause this distortion where both the long and short legs are losing value.

Source: https://seekingalpha.com/article/4647461-ftls-hedge-fund-strategies-in-an-etf-format?source=feed_all_articles

I’ll start with the profit and loss as usual.

Source: https://seekingalpha.com/article/4650826-arkema-s-arkaf-q3-2023-earnings-call-transcript?source=feed_all_articles

We feel rightfully concerned with profit and loss.

Source: https://www.forbes.com/sites/theyec/2023/08/21/the-power-of-giving-in-business/