Risk Management
Perfect Hedge
Definition
What is Perfect Hedge?
A hedge that fully offsets changes in the value of the exposure.
Example in practice
How This Looks in Practice
Matching currency, amount, and date can create a near-perfect hedge.
Keep learning
Related Terms
Risk Management
Stress Test
An analysis of portfolio performance under severe but plausible scenarios.
Risk ManagementScenario Analysis
The estimation of outcomes under a defined combination of assumptions.
Risk ManagementSensitivity Analysis
The study of how an output changes when one input changes.
Portfolio TheoryCapital Asset Pricing Model
A model linking expected return to the risk-free rate, market risk premium, and an asset's beta.