risk management
hedging
Making an investment to reduce the risk of adverse price movements in an asset.
Example
"The airline bought oil futures as a hedging strategy against rising fuel costs."
💡 Memory Tip
A HEDGE is a protective barrier around your garden. Hedging protects your investments.
Etymology
From 'hedge' (a boundary or protective barrier) — protecting your investments with a financial barrier.
Common Misspellings
hedgeinghedgnghegdinghedgnig
Related Terms
See Also
risk managementderivativesinsurance