Risk-offsetting investments, also known as hedges, are financial instruments used to reduce the risk of an investment. They are designed to protect investors from losses due to market volatility or other factors. Hedging strategies can involve buying and selling derivatives, such as futures contracts, options, and swaps, or investing in assets that have a low correlation with the original investment. Hedging is often used by investors to reduce their exposure to risk while still allowing them to benefit from potential gains.