A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A h… 展开

Optimal hedging and optimal investments are intimately connected. It can be shown that one person's optimal investment is another's optimal hedge (and vice versa). This follows from a geometric structure formed by proba… 展开

A typical hedger might be a commercial farmer. The market values of wheat and other crops fluctuate constantly as supply and demand for them vary, with occasional large moves in either direction. Based on current prices an… 展开

Hedging can be used in many different ways including foreign exchange trading. The stock example above is a "classic" sort of hedge, known in the industry as a pairs trade due to the trading on a pair of related securities. As inv… 展开

A hedging strategy usually refers to the general risk management policy of a financially and physically trading firm how to minimize their risks. As the term hedging indicates, this risk mitigation is usually done by using … 展开

Many hedges do not involve exotic financial instruments or derivatives such as the married put. A natural hedge is an investment that reduces the undesired risk by matching cash flows (i.e. revenues and expenses). For e… 展开

There are varying types of financial risk that can be protected against with a hedge. Those types of risks include:
• Commodity risk: the risk that arises from potential movements in the value of commodity contr… 展开