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Heding foreign stocks with futures. the return ?

Joined
2/5/11
Messages
58
Points
18
I am a euro guy and wants to invest in a us stock. I want to hedge it through curerncy futures. can you tell me what is teh hedged return and unhedged return ? let us assume S(t-1) is the stock price in dollars at time t-1 . r(t-1) is the dollar-euro spot rate . and f(t-1) is the dollar-euro future rate. the unhedged return is S(t)*r(t)/S(t-1)*r(t-1) -1 . What about the hedged return ? is it unhedged return + (f(t-1) - f(t))/r(t-1) ?? I am going short on futures corresponding to S(t-1).. The return ae based in euros . Thank you for your help..
 
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