Managing Market Risk with Hedging Strategies

James is a financial advisor managing a diversified portfolio for his client, who is concerned about potential declines in the market due to economic uncertainties. James is considering various strategies to mitigate market risk while maintaining the portfolio's growth potential.

He has come across three different techniques that can be employed to manage this risk more effectively. As part of his analysis, he must decide which strategy is the most effective in protecting the portfolio against market downturns while remaining aligned with the client's investment objectives.