risk hedge

(redirected from Risk Hedges)

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
Mentioned in ?
References in periodicals archive ?
The market volatility of 2008 and 2010 has caused many funds to reach for new concepts such as "Risk Parity," "Risk-Based Allocations," "Tail Risk Hedges," and "Pension De-Risking," with managers glad to supply such products.
The most likely market suppliers of Asian Crisis risk hedges are the big insurance companies, like AIG, that have historically dealt in emerging market political risk insurance.
The collateral posting triggers for currency hedges are more stringent than those for interest rate and basis risk hedges. 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.
The BOJ also conducted a derivative transaction survey, which indicated the average daily dealing volume in Tokyo plunged 48.5% from the previous survey to $21.7 billion, reflecting slowing demand for interest rate risk hedges amid the ultra-easy monetary stance.