What is hedging (2024)

FAQs

What does it mean to hedge an answer? ›

hedging noun [U] (AVOIDING ANSWER)

a way of avoiding giving a direct answer or opinion: There has been too much hedging and delay, and not enough action. I notice the hedging in the report, full of "it could be" and "seems."

Hedging is a risk management strategy employed to offset losses in investments by taking an opposite position in a related asset. The reduction in risk provided by hedging also typically results in a reduction in potential profits. Hedging requires one to pay money for the protection it provides, known as the premium.

: to protect oneself from losing or failing by a counterbalancing action. hedge a bet.

Hedging is a strategy that tries to limit risks in financial assets. It uses financial instruments or market strategies to offset the risk of any adverse price movements. Put another way, investors hedge one investment by making a trade in another.

Hedges may take the form of many different parts of speech, for example: There might just be a few insignificant problems we need to address. (adjective) The party was somewhat spoiled by the return of the parents.

Benefits of hedging

Limit losses – Hedging allows you to limit your losses to an amount that you're comfortable with. The cost of the hedge will limit your upside, but you can be sure that your losses won't balloon in the case of a price decline.

Hedging is defined here as insurance-seeking behavior, with three attributes: (a) not taking sides; (b) pursuing opposite, mutually-counteracting measures to offset multiple risks; and (c) diversifying and cultivating a fallback position.

If someone asks you a question and you hedge, you're avoiding a straight answer. If you're not sure what your boss's political views are, you can hedge by not revealing yours. If you hedge your bets, you're trying to minimize risk or loss — that is, you're trying to cover yourself no matter what happens.

There are three types of hedge accounting: fair value hedges, cash flow hedges and hedges of the net investment in a foreign operation.

Other independents are hedging their bets. There was an element of hedging in this selection.

What is the synonym of hedge? ›

a physical object that blocks the way the messenger was confronted with a hedge of spears held aloft by the castle guards. fence. wall. barrier. barricade.

As a verb, “hedge” originally meant to create a physical border or to guard land with a hedge. The phrase “to hedge a bet” first appeared in 1672 in a satirical play. Someone who “hedges” a bet is trying to protect him or herself from a loss by making a counterbalancing bet.

Definitions of hedging. an intentionally noncommittal or ambiguous statement. synonyms: hedge. type of: equivocation, evasion. a statement that is not literally false but that cleverly avoids an unpleasant truth.

Hedging and softening include the tailored use of verbs (e.g., seem, appear), modals (e.g., could, can, might), adjectives of probability and quantity (e.g., possible, one of), adverbs of probability and frequency (e.g., possibly, generally), nouns (e.g., likelihood, probability), and certain phrases (e.g., based on, ...