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Chatham is the answer for NeuGroup's Talking Shop

Date:
October 29, 2021

Summary

The NeuGroup's online community provides their members a forum to pose questions and give answers. "Talking Shop" shares valuable insights from these exchanges, anonymously. Chatham Financial's hedging expertise provided the answer on how an efficient frontier works in practice for currency exposures.

“[Chatham] managed to reduce the number of hedged currencies from more than a dozen to ~4, by hedging the currencies with the greatest exposure risks.”
NeuGroup member
A NeuGroup member asked:Does anyone use efficient frontier in the balance sheet hedging program, i.e., consider the correlations between the currency pairs to determine the hedge ratio? I would like to learn how that works in practice.”

The member spoke to another peer whose company uses an efficient frontier based on its currency exposures generated by Chatham Financial.

  • “They use that as a base, but adjust based on their judgment to determine the optimal hedge plan,” the member said. “They managed to reduce the number of hedged currencies from more than a dozen to ~4, by hedging the currencies with the greatest exposure risks.”

Our expertise for corporates

Chatham provides the knowledge and expertise needed to manage the financial risk associated with interest rate, commodity, and foreign exchange volatility. We develop and implement hedging strategies for hundreds of public companies annually, based on deep and productive banking relationships, giving us market data and insights to enable you to secure the best pricing and terms. Our goal is to empower you to strengthen your financial position and support your company’s financial objectives.

With expertise across hedge accounting, regulatory compliance, valuations, and hedging transactions, we can support all aspects of financial risk management. Our ChathamDirect platform provides convenient workflow, robust analytics, and comprehensive accounting methodologies, supported by our unmatched commitment to client service. This unique combination of strategy, operations, and technology will empower you to run a best-in-class hedging program.