Definitions
In plain terms
A 100% ratio targets full measured currency exposure, while 50% targets half, subject to timing and implementation differences.
Technical
The ratio requires exposure definition and timestamp, eligible currencies, target bounds, rebalance frequency, rounding, lag, forward notional convention, and exceptional handling.
Scope
A 100% target does not guarantee zero realized currency effect.
Formula
h = hedge notional / measured exposureh=H/E| Symbol | Meaning | Unit |
|---|---|---|
H | hedge notional in exposure-equivalent units | currency exposure |
E | measured currency exposure | currency exposure |
Output unit: decimal ratio
Examples
- A governed methodology records hedge ratio with its source, cutoff, units, parameters, and effective version.
Common misconceptions
- Hedge Ratio does not have one universal implementation without the declared methodology, data basis, and constraints.
Concept relationships
Where this concept is used
Evidence and governance
- FTSE Currency Hedging Methodology Overview FTSE Russell, London Stock Exchange Group · first party methodology
Supports: preferred label, short definition, technical definition, formula
Limits: Production rates, holidays, currencies, tenors, and calculation details require the full applicable methodology and data licenses.
- Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract
Supports: variant distinction
Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.
- Reviewed by
- fintech-builder-batch-004
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- evidence reviewed
This record is evidence-reviewed and readable, but not yet promoted to published — it is served noindex,follow and excluded from the sitemap.