In my opinion, hedging a portfolio should not be seen as a way of making money, but rather as insurance. It may well make sense to temporarily hedge a portfolio against risk in case of market turbulence or important events that can cause volatility.

However, this is subjective and depends on the investor’s risk tolerance. While some investors focus on capital preservation and hedge their portfolios, others simply sit tight during corrections and bear markets. In either case, hedging should be something temporary. If you are constantly hedging your portfolio, you are likely to lose money or miss out on a lot of upside potential.

Thank you for your reply Andy. I’m now testing a hedging system based on mathematical formulas (currency correlations) and working on the millipede system which I studied for a long time.

I mainly hedge through diversification to reduce exposure more so than offsetting within the same asset class. I’d be interested to hear some more thoughts on this. I’m aware of the use of options for hedging purposes but I’m yet to exercise this.