If you own GBP AUD in the same proportion to CHF JPY are you hedged?

Daal · Dec 21, 2006

Against a possible carry trade goes bust?

late apex · Dec 21, 2006

Why would you expect that to be the case?

Daal · Dec 21, 2006

Cause you own the same amount of bubble as you own of insurance against it

illiquid · Dec 21, 2006

If you are long carry trade via short yen with everyone else, then offsetting with long CHF won't protect you.

Daal · Dec 21, 2006

I'm long everything in the title

late apex · Dec 21, 2006

If you are long CHF/JPY, adding GBP/AUD -- long or short, in any ratio -- is most certainly not a hedge.

I'd suggest that you read up on the concept of statistical correlation. Then study correlations among the various currency pairs. Look at mataf.net or run your own in Excel.

Daal · Dec 21, 2006

short USD and long all these currencies, guys

Bitstream · Dec 21, 2006

then yeah if u also short the usd u are technically hedged. me thinks.

illiquid · Dec 21, 2006

Quote from Daal:

short USD and long all these currencies, guys

However it plays out in relation to a carry trade liquidation, you are certainly not "hedged" against the dollar.