Model — @RISK Developer's Kit

The future price of commodities is never certain. To help ensure a good return on their investments, investors often try to hedge - or reduce - the risks associated with price fluctuations. This model shows how hedging affects the volatility of a futures porfolio.

User Inputs	Value
Current Spot Price ($):
Mean Spot Increase ($/month):
Std. Dev of Spot Increase ($):
Current Futures Price ($):
Std Dev of Futures Price ($):
Correlation Between Spot and Future Changes:
Hedge Ratio: