Hedge Ratio Calculator
Enter the value you want to hedge and the value of one contract to find the hedge ratio.
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Enter the value to hedge and value per contract to see the hedge ratio.
Worked example
With these example inputs:
- Value to hedge$500,000
- Value per contract$250,000
Hedge ratio (contracts): 2
- The other way round0.50
- If the first figure were 10% higher2.20
Frequently asked questions
How is the hedge ratio calculated?
Divide the value of the exposure by the value of one hedging contract. To hedge $500,000 with contracts worth $250,000 each, you need a hedge ratio of 2 contracts.
What does the hedge ratio tell me?
It shows how many contracts offset the position's risk. A ratio of 1 fully hedges, while a lower ratio leaves part of the exposure open on purpose.