hedging

Cultural  

1. The practice by which a business or investor limits risk by taking positions that tend to offset each other. For example, a business stands to lose money if the price of a commodity it holds declines, but it can offset this risk by agreeing to sell a specified amount of the commodity at a set price at some point in the future.

---

Discover More

Hedge funds, which are investment funds usually open only to the very wealthy, grew in the 1990s. The near failure of one such fund in 1998, Long-Term Capital Management, sent shock waves through Wall Street.

Example Sentences

Any downside risks to net-interest income are likely to be offset by tailwinds such as structural hedging and lower funding costs, the analyst adds.

From The Wall Street Journal

“That reduces speculation,” Lundin said, adding that margin increases have been tracking the rally in gold and silver this year, but that they also increase hedging costs for end users of the commodity.

From MarketWatch

Many are staying long U.S. equities but hedging out dollar exposure.

From Barron's

Traders and advisers say that family offices often have little interest in hedging their bets through tools such as derivatives.

From The Wall Street Journal

Today, adjustments instead take place in currencies, spreads, and hedging costs.

From Barron's

Related Words

• prevarication