Hedge (finance)

<p>A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of <a href="/facts/Financial_instrument/2d93t6Ya">financial instruments</a>, including <a href="/facts/Stock/Qa912YwX">stocks</a>, <a href="/facts/Exchange-traded_fund/ShD4RpcJ">exchange-traded funds</a>, <a href="/facts/Insurance_policy/xnuNEzpS">insurance</a>, <a href="/facts/Forward_contract/A5FxeMtX">forward contracts</a>, <a href="/facts/Swap_(finance)/koSzDf30">swaps</a>, <a href="/facts/Option_(finance)/5gJFXV3X">options</a>, gambles, many types of <a href="/facts/Over-the-counter_(finance)/tp6s0kEW">over-the-counter</a> and <a href="/facts/Derivative_(finance)/jx4CbakW">derivative</a> products, and <a href="/facts/Futures_contract/4SD3dKty">futures contracts</a>.
</p><p>Public <a href="/facts/Futures_market/qRQpFANa">futures markets</a> were established in the 19th century to allow transparent, standardized, and efficient hedging of agricultural <a href="/facts/Commodity/zD0Em9v7">commodity</a> prices; they have since expanded to include <a href="/facts/Futures_contract/4SD3dKty">futures contracts</a> for hedging the values of <a href="/facts/Energy_derivative/ysY3loga">energy</a>, <a href="/facts/Precious_metal/oUHuGgva">precious metals</a>, <a href="/facts/Foreign_currency/g5GPGfTe">foreign currency</a>, and <a href="/facts/Interest_rate/Nb4JN7gR">interest rate</a> fluctuations.
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Hedge (finance)