cross hedge investment & finance definition
Offsetting
a risk in a cash market security or commodity by buying or selling a futures
contract for a similar investment. A cross hedge is done when there is a high
degree of correlation between the two investments but an exact futures contract
doesn’t exist.
See cross hedge in Wall Street Words
In futures trading, an offsetting position in a futures contract for an existing position in a related commodity in the cash market. An example would be the sale of a contract on wheat for delivery in two months in order to offset an existing cash position in oats.
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