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.

## 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 position protected by a hedge (\$)
• TV is the total position value (\$)

## How to Calculate Hedge Ratio?

The following example problems outline how to calculate Hedge Ratio.

Example Problem #1:

1. First, determine the value of position protected by a hedge (\$).
• The value of position protected by a hedge (\$) is given as: 15,000.
2. Next, determine the total position value (\$).
• The total position value (\$) is provided as: 50,000.
3. 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