Cross hedge vs Proxy hedge Cross, always, process

Wendy01

What's your thought process on this?
I always get confused
Tks

liangfeng

Please refer to schewser practice exam volume 2 p238. the two triangles, the best explanation I have seen.

bpdulog

Proxy is you use a currency similar to the foreign currency and cross hedge you use the foreign currency with a 3rd currency.

infinitybenzo

Proxy - attempt to eliminate all currency risk using a proxy since contracts on the original currency are not actively traded.

Cross - different in the currency world, you are trading one exposure for another, presumably based on manager insight.

NO EXCUSES