EJ = EU * UJ
so if you buy EU and UJ ande sll EJ
you are basically hedged but the daily swap will kill t his hedge in the long run
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people normally hedge three or more pairs in a perfect hedge so that economic news in any pair creates an arbitrage opportunity ; the hedge is closed to earn this difference
so if you buy EU and UJ ande sll EJ
you are basically hedged but the daily swap will kill t his hedge in the long run
========
people normally hedge three or more pairs in a perfect hedge so that economic news in any pair creates an arbitrage opportunity ; the hedge is closed to earn this difference
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