Sentence:  A <WSD>hedge</WSD> is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a <WSD>hedge</WSD> is used to reduce any substantial losses/gains suffered by an individual or an organization. 
Meaning of the word marked with <WSD> tags:  Contract or arrangement reducing one's exposure to risk (for example the risk of price movements or interest rate movements).