The use of futures contracts to reduce or eliminate the downside systematic risk of an entire portfolio. However, this hedge is hard to implement in real world because no single contract can offset the risk of an entire set of individual assets.
The hedge is structured to offset the net risk associated with the overall combination of assets and liabilities. An example is a position in an interest rate futures to equate the interest rate exposure on the asset side with the interest rate exposure on the liability side.
