How do you hedge out market risks for a given portfolio?

Question:

How do you hedge out market risks for a given portfolio?.

Market Risk

Market Risk refers to risk faced by various companies or corporates due to changes or fluctuations in the market prices. It is basically the risk of facing a loss due to changes in market prices and such risk is also called Systematic risk.

Answer and Explanation:

Market risk for a given portfolio can be easily hedged by achieving diversification of your portfolio. You could hedge your market risk by either buying more fixed income securities like bonds or assets with lower risk like ETFs. You could also seek professional help by approaching a financial planner who would help you in diversifying your portfolio.


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