What context can I use each word in?
Learn when and how to use these words with these examples!
arbitrage
Example
The investor engaged in arbitrage by buying stocks on one exchange and selling them on another for a higher price. [arbitrage: noun]
Example
She is skilled at arbitraging currencies to make a profit from the fluctuating exchange rates. [arbitraging: verb]
hedging
Example
The company used hedging techniques to protect itself from fluctuations in commodity prices. [hedging: noun]
Example
Investors often hedge their portfolios by diversifying their investments across different asset classes. [hedging: verb]
Good things to know
Which word is more common?
Hedging is more commonly used than arbitrage in everyday language, as it is a widely employed risk management strategy across various industries. Arbitrage, on the other hand, is more specific to the financial industry and may be less familiar to ESL learners.
Whatโs the difference in the tone of formality between arbitrage and hedging?
Both arbitrage and hedging are formal terms used in the field of finance and investing. However, arbitrage may be considered more technical and specialized, while hedging is a more versatile term that can be used in both formal and informal contexts.
