Hedging involves taking an offsetting position to reduce exposure to price fluctuations. Common hedging instruments include options, futures, and inverse ETFs. While hedges reduce risk, they also typically reduce potential returns. Perfect hedges are rare; most hedging strategies aim to limit rather than eliminate risk.
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Quick Reference
Category
risk
Difficulty
Beginner
Reading Time
1 min
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Where You'll See This
This concept appears throughout stock detail pages and financial data.