MillTech Team

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In the third instalment of our Navigating Currency Risk series, MillTech's Quant team explores how Cash Flow at Risk (CFaR) can help holders of foreign currency risk balance carry opportunities with the potential cash demands of hedge settlement.&nbsp;
This guide covers:&nbsp;
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<li data-local-id="4a752c421e11" data-prosemirror-content-type="node" data-prosemirror-node-name="paragraph" data-prosemirror-node-block="true">How hedge tenor affects both carry and settlement cash flows</li>
<li data-local-id="838b128581c6" data-prosemirror-content-type="node" data-prosemirror-node-name="paragraph" data-prosemirror-node-block="true">How CFaR estimates potential settlement outflows</li>
<li data-local-id="ac67063e0344" data-prosemirror-content-type="node" data-prosemirror-node-name="paragraph" data-prosemirror-node-block="true">How a liquidity budget can constrain tenor allocation while accommodating the full hedge</li>
<li data-local-id="0ce8a134e59e" data-prosemirror-content-type="node" data-prosemirror-node-name="paragraph" data-prosemirror-node-block="true">What hypothetical USD/CHF and EUR/CHF backtests show about carry, settlement risk and hedge coverage</li>
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Download the free paper to see how a CFaR budget can guide tenor selection within a defined limit for estimated settlement cash flow risk.
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3 Tenor

Adam Mercuri   Colour Headshot

Effective tenor management balances carry&nbsp;opportunities with the potential cash demands&nbsp;at settlement.
Adam Mercuri, Quant Solutions Lead, MillTech

Tenorsmall

See how Cash Flow at Risk helps balance hedge carry opportunities with potential settlement cash demands across tenors.

Tenor Management: Balancing Carry and Cash Flow at Risk