Natural Hedge
Categories: Derivatives
You don't need fancy derivatives for this one.
A hedge is an investment vehicle that mitigates risk (and usually, reward). So a normal hedged trade might run from where you think NASDAQ is going up...but you think AMZN is going up more. So you'd buy AMZN long, and short QQQQ (index fund proxy for NASDAQ). That's a constructed hedge.
What's a natural one? Well, if you believe that the bond market goes in the opposite direction as the stock market in your contemporaneous era (and many times, this is the case), then you could be long stocks and short bonds and have a kind of natural hedge.
Kinda. Doesn't always work.