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Selective Hedging

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Selective hedging
Protecting investments during some time periods and not during others.

Selective Hedging
The practice of making investments that reduce the risk to part of one's portfolio, but not the whole portfolio. Alternatively, selective hedging may involve making offsetting investments on the whole portfolio, but only at certain times. Selective hedging carries higher risk than other hedging strategies simply because it leaves some of one's investments un-hedged.


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Some corporations, as a matter of policy, forgo hedging altogether, often with the explanation that the kind of selective hedging Dow uses is only a hair-breadth removed from speculation.
Under the selective hedging strategy, the exporter sells the foreign currency forward if the current spot rate is less than or equal to the forward rate (Equation (3a)) and does not hedge if the current spot rate exceeds the forward rate (Equation (3b)).
 
 
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