Hedge Ratio Calculator
Please visit from a larger screen to use the Moontower calculators.
The hedge ratio calculator computes how many dollars of asset B you need to hedge asset A.
Hedge ratios can be useful for long/short pairs, hedging a basket or single stock with an index future, or translating option deltas from one name to another.
A hedge ratio multiples the beta between the 2 assets by the dollar amounts. The main inputs are the volatilities of each asset (implied or realized depending on user preference) and a correlation.
More details on the computation can be found here.