8 mo (edited)
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An investment that is made with the intention of reducing risk associated with price moves in the markets. The focus is to offset the adverse movement in an asset.
This is done by taking an opposite in a related security. Derivatives are the vehicle that is typically used.
Companies that utilize commodities for their core business tend to hedge against price fluctuations. A good example of this is the airline industry that hedges the price of fuel.
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