Hedge Effectiveness
Measure hedge offset effectiveness against caller-supplied bounds.
Description
Dollar-offset comparison measures hedge magnitude relative to the hedged-item change.
Dollar-offset comparison measures hedge magnitude relative to the hedged-item change. Sign matters separately from absolute ratio.1
Measure hedge offset effectiveness against caller-supplied bounds.
When to use Hedge Effectiveness
Use this tool to measure hedge offset effectiveness against caller-supplied bounds.
Prepare the documented facts, aligned totals or expected/observed evidence labels requested. Choose applicable requirements and thresholds separately before interpreting a planning screen.
How to use Hedge Effectiveness and understand its results
- Prepare the documented facts, aligned totals or expected/observed evidence labels requested. Choose applicable requirements and thresholds separately before interpreting a planning screen.
- Enter hedgedItemChange, hedgingInstrumentChange, minimumEffectivenessPercent, maximumEffectivenessPercent using the field table and calculation rules, then run the tool.
- Read offsetRatioPercent, ineffectivenessAmount, effective. The explanation below defines the units, signs, ordering and any flags or placeholder values.
- If the tool reports an input issue, correct the values and run it again. Apply the stated assumptions when interpreting a successfully returned result.
| Input field | Meaning | Value type; see rules below | Requirement |
|---|---|---|---|
| hedgedItemChange | Hedged-item value change | number | Required |
| hedgingInstrumentChange | Hedging-instrument value change | number | Required |
| minimumEffectivenessPercent | Minimum effectiveness (%) | number; minimum: 0 | Required |
| maximumEffectivenessPercent | Maximum effectiveness (%) | number; minimum: 0 | Required |
Enter nonzero signed item change, signed instrument change and nonnegative bounds; return ratio/sum and inclusive ratio-window flag.
offset%=100abs(instrument/item); ineffectiveness=item+instrument Units, indexing, boundary conditions and exceptional cases are defined in the calculation rules above.
| Output field | Meaning | Value type |
|---|---|---|
| offsetRatioPercent | Absolute offset ratio (%) | number; minimum: 0 |
| ineffectivenessAmount | Residual ineffectiveness | number |
| effective | Within supplied effectiveness range | boolean |
{
"input": {
"hedgedItemChange": 100,
"hedgingInstrumentChange": -95,
"minimumEffectivenessPercent": 80,
"maximumEffectivenessPercent": 125
},
"output": {
"offsetRatioPercent": 95,
"ineffectivenessAmount": 5,
"effective": true
}
}Limitations and assumptions
Bounds need not be ordered; same-sign changes can pass the absolute ratio. No economic relationship or hedge-accounting qualification is determined.
Numeric inputs, where present, must be finite. Follow the calculation-specific rules for overflow, underflow and exceptional cases. Missing required fields, extra fields, wrong value types and violations of the calculation rules are input errors. A successfully returned false flag is an evaluated outcome; its meaning is explained above.
Alternative or Complementary methods
Use Lease Liability Recompute: Recompute a fixed-payment lease liability and compare it with the reported amount. For a complementary task, use Final Analytics Reconciliation: Recheck final analytical consistency after recorded corrections.
References
-
Hedge Effectiveness — tool.io
Similar or alternative tools
- Lease Liability Recompute
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- Final Analytics Reconciliation
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