Two months ago, while expressing some concern about the markets, I played around with ways to hedge the risk of news-driven volatility in a portfolio. I formed some portfolios that were hedged dollar for dollar with a short position in the index. I looked at using the biggest 52-week losers among index components, those yielding at least 3% and trading at new lows, and the ones trading below book value. I also had one portfolio that used F scores, but that one ailed almost out of the box and was discarded.The results are informative, and I want to review them and share some other observations about the portfolios. I am also going to rebalance and continue testing this approach. The portfolio of stocks at new lows didn't work that well. Overall, the mix had a two-month return of -1.76%. As the market rose 10%, the long positions gained just 6.59%. Although 16 of the 20 stocks went higher, the four losers averaged more than 11%, with GameStop ( GME) and Lexmark ( LXK) leading the way on the downside. I am going to keep tracking this one to see how it performs when we finally have a down cycle in the market. For this long-biased portfolio, the short-term results are disappointing. If you were leaning short two months ago, as many were, this approach saved you a ton of cash. The portfolio of stocks trading below stated book value did well in the rally. Overall, the fully hedged portfolio gained 4.53%. Nine of the 11 stocks went higher for an unhedged gain of 19%. Unfortunately, since we used stated and not tangible book value, Alpha Natural Resources ( ANR) was in the mix, and those shares declined more than 34%. Stocks such as First Solar ( FSLR), Phillips 66 ( PSX) and NRG Energy ( NRG) led the way higher with huge gains in the two-month period. If you were long-biased but nervous, this approach has worked OK for you so far. The stars so far are stocks that were the largest 52-week losers. This was a portfolio that was long stocks that were down more than 50% in the last year, hedged dollar for dollar with a short index position. The portfolio gained 6.28% over the two-month period. The unhedged portfolio of losers would have shown a gain of 22.67%.