Investment Glossary · Quick read · No ads
Basis Risk
The short answer
The risk that the price of a hedging instrument does not move in perfect correlation with the asset being hedged, leaving residual exposure.
What is Basis Risk?
The risk that the price of a hedging instrument does not move in perfect correlation with the asset being hedged, leaving residual exposure.
About this page. Written by Associate Professor Charles Lo, CPA, PhD. Checked against reliable sources before publication. No ads and no paywall. Editorial standards · How we fact check · Corrections log · Report an error
Educational information only. Nothing on this page is personal financial, tax or legal advice. Investing involves risk, including the possible loss of principal.
