- Cross Hedge
- The act of hedging ones position by taking an offsetting position in another good with similar price movements.
Although the two goods are not identical, they are correlated enough to create a hedged position as long as the prices move in the same direction. A good example is cross hedging a crude oil futures contract with a short position in natural gas. Even though these two products are not identical, their price movements are similar enough to use for hedging purposes.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
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cross-hedging — Hedging a cash commodity using a different but related futures contract when there is no futures contract for the cash commodity being hedged and the cash and futures markets follow similar price trends ( e.g., using soybean meal futures to hedge … Financial and business terms
proxy hedge — proxy hedge, surrogate hedge, or tandem hedge See cross hedge … Financial and business terms
surrogate hedge — proxy hedge, surrogate hedge, or tandem hedge See cross hedge … Financial and business terms
tandem hedge — proxy hedge, surrogate hedge, or tandem hedge See cross hedge … Financial and business terms
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