If you had a large concentrated position in a single company or an ETF, then you could hedge downside risk via put options. If you're looking to hedge an asset class you own (like US Equities, for example) then you could build a position in an asset class that has had zero or negative correlation to the asset class you're trying hedge.
I think it's important for me to note that I rarely believe in timing a hedge in a portfolio, as it's very hard to do and often expensive. Protecting against the downside of a single stock concentrated position is another issue, but my general philosophy around portoflio construction is that it should be positioned to expect volatility, avoid over concentrating in single securities or asset classes, and it maintains a pre-established plan for dealing with market swings before volatility arrives.
For informational purposes only. Not to be considered investment, tax, or legal advice.
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