Hedge

To protect against possible loss by taking offsetting actions, especially to reduce financial risk.

verb

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Imagine This

Picture a cautious investor who plants a literal hedge around a portfolio diagram on a desk. As markets swing, the hedge absorbs the impact of losses, keeping the overall position safer.

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Sounds Like

/hɛdʒ/ (sounds like 'hedge')

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Looks Like

Hedge, a dense row of shrubs used as a boundary; imagine a privacy hedge between two houses shared by neighbors.

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Remember This

To hedge your bets means to reduce risk by taking offsetting positions or protections. The term comes from the idea of a garden hedge that fences in and protects what’s inside.

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Other Forms

hedgesverb, 3rd person singular present

hedgedverb, past tense

hedgingverb, present participle

hedgenoun

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Connect With

mitigate, protect, guard, offset, diversify, risk management, hedge fund

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Note

Hedge implies reducing risk, not guaranteeing profits. In finance, hedging often uses derivatives or opposite positions; a hedge may still involve some risk or cost. The noun form hedge refers to the plant boundary itself.

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Study Deeper

Examples

Investors hedged their bets by buying put options to limit potential losses.
The company hedges currency risk by matching expenditures and revenues in the same currency.

Synonyms

protectmitigateoffsetguardbuffer

Antonyms

exposeriskgamble

Etymology

From Old English haga (hedge, fence); related to Dutch haag and German Hecke, originally meaning a fence or boundary and later extending to the financial sense of reducing risk.

Mnemonic

HEDGE: Hold Every Dollar, Guard Earnings (visualize a hedge guarding a portfolio against losses).