The hedging can be divided into three types which will help investors protect their portfolio from unwarranted risks of currency, commodities, etc. i. Forward Contract: Over-the-counter contracts to buy or sell a commodity on a future date at a specified price. ii. Futures Contract: This is a standardized contract that works on similar grounds as the forward contract. iii. Money Markets: Hedging can also be done with the money market instrument which has a maturity of one year or less.