Enter the value of position protected by a hedge ($) and the total position value ($) into the Hedge Ratio Calculator. The calculator will evaluate and display the Hedge Ratio.

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## Hedge Ratio Formula

The following formula is used to calculate the Hedge Ratio.

HGR = VP / TV *100

- Where HGR is the Hedge Ratio (%)
- VP is the value of the position protected by a hedge ($)
- TV is the total position value ($)

To calculate the hedge ratio, divide the value of the position protected by a hedge by the total position value.

## How to Calculate Hedge Ratio?

The following example problems outline how to calculate Hedge Ratio.

Example Problem #1:

- First, determine the value of position protected by a hedge ($).
- The value of position protected by a hedge ($) is given as: 15,000.

- Next, determine the total position value ($).
- The total position value ($) is provided as: 50,000.

- Finally, calculate the Hedge Ratio using the equation above:

HGR = VP / TV *100

The values given above are inserted into the equation below and the solution is calculated:

HGR = 15,000 / 50,000 *100 = 30 (%)

Example Problem #2:** **

For this problem, the variables required are provided below:

value of position protected by a hedge ($) = 60,000

total position value ($) = 150,000

Test your knowledge using the equation and check your answer with the calculator above.

HGR = VP / TV *100** = ?**