Find the share of an exposure that is hedged with futures.
Please do not make financial decisions based on these results.
What is the Hedge Ratio Calculator?
Find the share of an exposure that is hedged with futures. To use the Hedge Ratio Calculator, enter hedge position value, exposure value; it returns hedge ratio, unhedged exposure, and shows them instantly as you type.
Where the Hedge Ratio Calculator fits
Find the share of an exposure that is hedged with futures. The main figure it returns is the Hedge ratio, worked out from the values you enter.
It belongs with the other investment tools. If you are comparing options or checking a result from another angle, try the Optimal Hedge Ratio Calculator, Interest Rate Calculator or the Payback Period Calculator.
How to use the Hedge Ratio Calculator
- Enter your numbers. Start with Hedge position value ($), Exposure value ($). Use a rate of return you consider realistic; small changes compound into large differences. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Hedge ratio, and the cards below show Unhedged exposure. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Hedge Ratio Calculator using the default values shown in the calculator above:
Inputs
| Hedge position value ($) | 400,000 |
|---|---|
| Exposure value ($) | 500,000 |
Results
| Hedge ratio | 80% |
|---|---|
| Unhedged exposure | $100,000.00 |
With these inputs the calculator returns Hedge ratio: 80%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Hedge position value ($) from 400,000 to 480,000 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Hedge ratio | 80% | 96% | +20% |
| Unhedged exposure | $100,000.00 | $20,000.00 | -80% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Hedge Ratio Calculator reports Hedge ratio and unhedged exposure. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. Investment returns are not guaranteed. The result shows what the numbers you enter would produce, not what the market will do. It is for information, not financial, tax or legal advice.
Frequently asked questions
What is a 100% hedge?
The hedge offsets the full exposure, removing price risk but also its upside.
Are investment returns guaranteed?
No. Real returns vary. Use these tools to compare scenarios, not to predict results.
What rate of return should I assume?
There is no guaranteed rate. Test a range of conservative and optimistic rates, and remember that fees and inflation reduce your real return.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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