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Integrated hedge
       
 
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Integrated hedge

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Integrated hedge
A Hedge that combines more than one distinct price Risk. For example, crude oil is usually priced in US dollars. Therefore a producer of crude oil whose home Currency is not the dollar (say, the euro) is exposed to both Currency risk and the price Risk for crude oil. One possible integrated Hedge would be a single quanto Option, which would Hedge the price of crude oil in euro. As such, it would depend heavily on the Correlation (if any) between the two markets.
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