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Risk Hedge

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Risk Hedge
The practice of taking opposite positions in two different but similar assets in order to profit from the price movements between them. See also: Hedge.
risk hedge
The taking of an offsetting position in related assets so as to profit from relative price movements. For example, an investor might purchase futures contracts on gold and sell futures contracts on silver in the belief that gold will become relatively more valuable compared with silver over the life of the contracts.
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Commodity futures trading is an important industrial foundation that serves as a pricing referent for natural resources and also acts as a risk hedge for related industries to help them avoid suffering damage from major price changes.
Japanese editorial excerpts by Japan Weekly Monitor
Structured transactions, on the other hand, are designed on an ad hoc basis and require the identification of every risk involved in the proposed transaction and their mitigation through third-party credit enhancement (buyers' payment in offshore escrow accounts, performance bond, commodity price risk hedge, etc.
Bespoke financing: squaring Africa's trade circle by Versi, Anver / African Business
Standard & Poor's believes that the market for interest rate and basis risk hedges enjoys less price volatility and has more liquidity, thus allowing for a lower-rated counterparty without increasing the overall risk to the transactions.
Hedging considerations in CDO transactions by O'Keefe, Brian / The Securitization Conduit
 
 
 
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