Hedge

Definition

A hedge is an investment or financial strategy designed to reduce the risk of adverse price movements in an asset or portfolio. In geopolitical context, hedging extends beyond finance to describe a state's strategy of maintaining relationships with multiple powers to mitigate risk from any single alliance dependency. Financial hedging instruments include futures contracts, options, swaps, and diversified asset allocation. Geopolitical hedging is practiced by middle powers that avoid fully aligning with any great power bloc, maintaining economic and security relationships with competing powers simultaneously. Countries like India, Turkey, and the Gulf states exemplify geopolitical hedging behavior.