Intertemporal hedging demand
= Intertemporal hedging demand
{title2=$y^*=-[V_w\ell+\sigma_{\rm state}V_{w{\rm state}}]/V_{ww}$}
Intertemporal hedging demand adjusts the myopic risky position when investment opportunities depend on a stochastic state. Shared noise between wealth and that state contributes a cross derivative to the <Hamilton-Jacobi-Bellman equation>. In a complete diffusion market the optimal exposures combine the myopic <market price of risk> term and the value-gradient hedge term.