Glossary

Hedging

Reducing a risk by taking offsetting positions

Hedging is defined as protecting existing and future positions (in full or in part) by entering into offsetting positions that are negatively correlated. This means that risks are hedged by deploying financial instruments or entering into transactions that react to market charges in precisely the opposite way to the position to be hedged. The term “portfolio diversification” is also used in this context.

Also see:  Warrant
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