Hedge Ratio

The proportion of a position offset by a hedge.

The hedge ratio is the fraction of an exposure that is protected by an offsetting hedge, such as how many futures contracts are needed to neutralize a portfolio. A ratio of 1 fully hedges the position; lower ratios leave some risk in place to retain upside.

A hedge ratio of 0.8 meant she offset most, but not all, of the portfolio's downside.