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The Trend of International Risk Diversification

Author

Listed:
  • Oana Mionel

    (“Dimitrie Cantemir” Christian University)

  • Alexandra Moraru

    (“Dimitrie Cantemir” Christian University)

Abstract

The goal of this paper is to analyze the international diversification of risk through portfolio diversification based on investments abroad, particularly by investing in currencies of emerging countries. The starting point of the analysis is the work of Harry Markowitz, Portfolio selection, a reference work for the global financial environment in which the author states that a portfolio is efficient if it provides the highest possible expected return for a given level of risk and the lowest possible level of risk for any expected rate of earnings. The information used for this study comes from numerous sources and of great importance to international financial markets. The results based on the used data and information provide a comprehensive scan of how Federal Reserve proposed a clustered index of currencies, the current trend of exchange, the emerging BRIC countries scenario for 2050 and sources of the volatile emerging markets. Thus, following the completion of this work, we consider it necessary to pay attention to the course of emerging markets whose economic development and openness plays a significant role in their penetration of international investors’ investment plan.

Suggested Citation

  • Oana Mionel & Alexandra Moraru, 2013. "The Trend of International Risk Diversification," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(5), pages 235-246, October.
    • Handle: RePEc:dug:actaec:y:2013:i:5:p:235-246
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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/1872/1914
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    References listed on IDEAS

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    2. William F. Sharpe, 1963. "A Simplified Model for Portfolio Analysis," Management Science, INFORMS, vol. 9(2), pages 277-293, January.
    3. Alan M. Taylor, 2000. "Dollarization as a technology import," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may19.
    4. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
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