What Is a Hedges?

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

What is a hedge in simple terms?

A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting or opposite position in a related security.

What is the hedge and why?

A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. ... Hedging employs various techniques but, basically, involves taking equal and opposite positions in two different markets (such as cash and futures markets).