Why does hedging a common stock portfolio using stock index futures work best if the portfolio being hedged is similar to the underlying stock index of the futures contract ...

If the common stock portfolio is similar to the underlying stock index of the futures contract then ...

Why does hedging a common stock portfolio using stock index futures work best if the portfolio being

Question:

Why does hedging a using stock index futures work best if the being hedged is similar to the underlying stock index of the futures contract?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...