> For the complete documentation index, see [llms.txt](https://docs.force.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.force.xyz/trader-tools/cross-hedge-calculator.md).

# Cross-Hedge Calculator

Sizes a position in one Force market against a position in the other, so what is left is the **spread** between them rather than the level of rates.

<figure><img src="/files/kn77kxdje7c7gLQ0skPr" alt=""><figcaption></figcaption></figure>

## Input

| Field        | Unit      | What it means                                               |
| ------------ | --------- | ----------------------------------------------------------- |
| **Position** | contracts | Your existing position in the market whose page you are on. |

## Outputs

**Hedge**, the offsetting contract count in the other market, and the **notional** of each leg at current mark prices.

## The calculation

DV01 per contract is identical in both markets, so the hedge is **DV01 neutral at one for one**: the same number of contracts, opposite direction.

$$
\text{hedge contracts} = -,\text{position contracts}
$$

Long 10 FORCE-MORT30 against short 10 FORCE-US10Y leaves a position in the mortgage spread. If both rates rise 20 basis points, the two legs cancel exactly and the position is flat. If the mortgage rate rises 25 while the 10-year rises 20, the position makes the 5 basis point widening.

The two notionals will usually differ, because the mortgage rate and the 10-year yield trade at different levels and notional is contracts times price. That difference is expected and does not affect the hedge: what is being neutralised is the sensitivity to a rate move, and that is equal.

## What you are left holding

A hedged position is **not** a flat position. It is a clean position in the mortgage spread, which moves for its own reasons: mortgage-backed securities, lender margins and prepayment expectations, rather than the Treasury market. Over the last several years that spread has ranged from roughly 1.5 to 3.1 percentage points, so it is a real exposure with real range.

See [DV01 and Cross-Hedging](/asset-directory/dv01-and-cross-hedging.md) for why one for one is the right ratio and what it does and does not neutralise.


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