Hedge (finance)

Imagine you have a jar of cookies and you really love them. But you are worried that if someone or something takes them away or if the cookies go bad, you will be very sad. In order to protect yourself, you decide to share some of the cookies with your friend while keeping some for yourself. That way, if something happens to your cookies, you will still have some left.

This is kind of like what companies or investors do with their money. They don't want to lose all their money on one investment or stock. So, they put some of their money in other investments or stocks just in case one goes down. This is called hedging. It's like sharing cookies with a friend - you're protecting yourself in case something bad happens.

Hedging can be done in different ways, like buying insurance or investing in different areas to spread the risk. By hedging, companies and investors can protect themselves from losing everything and make sure they don't have all their "cookies in one jar."