HEDGING Definition & Meaning

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hedging

The practice by which a business or investor limits risk by taking positions that tend to offset each other. For example, a business stands to lose money if the price of a commodity it holds declines, but it can offset this risk by agreeing to sell a specified amount of the commodity at a set price at some point in the future.

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Hedge funds, which are investment funds usually open only to the very wealthy, grew in the 1990s. The near failure of one such fund in 1998, Long-Term Capital Management, sent shock waves through Wall Street.

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Example Sentences

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It is a conservative estimate, too, because it does not include various fees to banks, financial advisers and other financing costs, including currency hedging.

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Denmark would break off relations with the U.S. and insist, with a certain amount of hedging, that this was an act of war, sort of.

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Fried, at the Atlantic Council, cautioned that “it was not good for the United States to have other states hedging their bets.”

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Most big auto companies, however, are hedging their bets on full electrics.

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The special counsel is effectively hedging his bets in this all-important wager on the Pence evidence.

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