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

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

HGR = VP / TV *100 = ?