Common hedging strategies include diversification, future and options trading, and pairs trading. Diversification involves investing in multiple different assets, spreading risk across investments in order to help protect against market volatility. Future and options trading involves buying or selling an option on a security or commodity. The holder can then buy or sell the underlying asset at a certain price within a certain period of time. Pairs trading involves opening a long position in an undervalued asset while shorting on its overpriced counterpart. The trader stands to make a profit when the assets return to their original correlation rate.