Basis risk is a financial risk that arises when offsetting investments in a hedging strategy do not experience price changes in entirely opposite directions from each other. It is the risk associated with imperfect hedging due to the variables or characteristics that affect the difference between the futures contract and the underlying "cash" position. Basis risk arises because of the difference between the price of the asset to be hedged and the price of the asset serving as the hedge before expiration. The amount by which the spot price of the asset and the futures price differ measures the value of the basis risk. Basis risk is not to be confused with another type of risk known as price risk. Examples of basis risks include Treasury bill future being hedged by two-year Bond, foreign currency exchange rate (FX) hedge using a non-deliverable forward contract (NDF), and locational basis risk. Basis risk is considered a systematic, or market, risk.