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hedge

A hedge is a noncorrelating investment designed to minimize known, quantified risk.

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hedge

A hedge is a noncorrelating investment designed to minimize known, quantified risk.

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Catastrophe bonds are used as hedges (albeit imperfect) to help protect insurers against the risk inherent in their catastrophic exposures. Noncorrelating investments are investments that exhibit different risk characteristics from other investments within a portfolio.