IDEAS home Printed from https://ideas.repec.org/a/imx/journl/v4y2005i1p65-72.html
   My bibliography  Save this article

Is Portfolio Diversification Achievable Within The Mexican Stock Market?

Author

Listed:
  • Iván Aguayo Guajardo

    (Tecnológico de Monterrey, Campus Monterrey)

Abstract

La diversificación es la mayoría de las veces considerada una característica de cualquier mercado de valores. Sin embargo, investigación reciente cuestiona este tema específicamente con respecto a los mercados emergentes dada la sincronía en los rendimientos de sus instrumentos y México es puesto en el ojo de la tormenta dentro de los 10 con más alta sincronía. Este análisis encuentra, con el uso de un modelo específico, que los inversionistas pueden reducir alrededor del 50% de la desviación estándar de los rendimientos de un portafolio al aumentar el número de acciones contenidas. Así que esta preocupación no debería ser una razón para que los inversionistas eviten invertir en la BMV.

Suggested Citation

  • Iván Aguayo Guajardo, 2005. "Is Portfolio Diversification Achievable Within The Mexican Stock Market?," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 4(1), pages 65-72, Marzo 200.
    • Handle: RePEc:imx:journl:v:4:y:2005:i:1:p:65-72
    as

    Download full text from publisher

    File URL: http://www.remef.org.mx/index.php/primera/article/view/194
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ron Bird & Mark Tippett, 1986. "Note---Naive Diversification and Portfolio Risk---A Note," Management Science, INFORMS, vol. 32(2), pages 244-251, February.
    2. John L. Evans & Stephen H. Archer, 1968. "Diversification And The Reduction Of Dispersion: An Empirical Analysis," Journal of Finance, American Finance Association, vol. 23(5), pages 761-767, December.
    3. Harvey, Campbell R, 1995. "Predictable Risk and Returns in Emerging Markets," The Review of Financial Studies, Society for Financial Studies, vol. 8(3), pages 773-816.
    4. Statman, Meir, 1987. "How Many Stocks Make a Diversified Portfolio?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 22(3), pages 353-363, September.
    5. Bhattacharya, Utpal & Daouk, Hazem & Jorgenson, Brian & Kehr, Carl-Heinrich, 2000. "When an event is not an event: the curious case of an emerging market," Journal of Financial Economics, Elsevier, vol. 55(1), pages 69-101, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tasca, Paolo & Mavrodiev, Pavlin & Schweitzer, Frank, 2014. "Quantifying the impact of leveraging and diversification on systemic risk," Journal of Financial Stability, Elsevier, vol. 15(C), pages 43-52.
    2. David Bradfield & Brian Munro, 2017. "The number of stocks required for effective portfolio diversification: the South African case," South African Journal of Accounting Research, Taylor & Francis Journals, vol. 31(1), pages 44-59, January.
    3. Gilles Boevi Koumou, 2016. "Risk reduction and Diversification within Markowitz's Mean-Variance Model: Theoretical Revisit," Papers 1608.05024, arXiv.org, revised Aug 2016.
    4. Paolo Tasca & Stefano Battiston, "undated". "Diversification and Financial Stability," Working Papers CCSS-11-001, ETH Zurich, Chair of Systems Design.
    5. Chia, Rui Ming Daryl & Lim, Kai Jie Shawn, 2012. "The Attenuation of Idiosyncratic Risk under Alternative Portfolio Weighting Strategies: Recent Evidence from the UK Equity Market," MPRA Paper 41455, University Library of Munich, Germany.
    6. Tasca, Paolo & Battiston, Stefano & Deghi, Andrea, 2017. "Portfolio diversification and systemic risk in interbank networks," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 96-124.
    7. Cabrini, Silvina M. & Stark, Brian G. & Irwin, Scott H. & Good, Darrel L. & Martines-Filho, Joao, 2005. "Portfolios of Agricultural Market Advisory Services: How Much Diversification Is Enough?," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 37(1), pages 101-114, April.
    8. S. G. M. Fifield & D. M. Power & C. D. Sinclair, 2002. "Emerging stock markets: a more realistic assessment of the gains from diversification," Applied Financial Economics, Taylor & Francis Journals, vol. 12(3), pages 213-229.
    9. Vitali Alexeev & Mardi Dungey, 2015. "Equity portfolio diversification with high frequency data," Quantitative Finance, Taylor & Francis Journals, vol. 15(7), pages 1205-1215, July.
    10. Florin Aliu & Besnik Krasniqi & Adriana Knapkova & Fisnik Aliu, 2019. "Interdependence and Risk Comparison of Slovak, Hungarian and Polish Stock Markets: Policy and Managerial Implications," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(2), pages 273-287, June.
    11. Alexeev, Vitali & Tapon, Francis, 2013. "Equity Portfolio Diversification: How Many Stocks are Enough? Evidence from Five Developed Markets," Working Papers 2013-16, University of Tasmania, Tasmanian School of Business and Economics, revised 20 Nov 2013.
    12. Sirapat Polwitoon & Oranee Tawatnuntachai, 2013. "In Search of Optimal Number of Bond Funds," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(1), pages 1-5.
    13. Kiani, Khurshid M., 2011. "Relationship between portfolio diversification and value at risk: Empirical evidence," Emerging Markets Review, Elsevier, vol. 12(4), pages 443-459.
    14. Vitali Alexeev & Francis Tapon, 2014. "The number of stocks in your portfolio should be larger than you think: diversification evidence from five developed markets," Published Paper Series 2014-4, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    15. Haensly, Paul J., 2020. "Risk decomposition, estimation error, and naïve diversification," The North American Journal of Economics and Finance, Elsevier, vol. 52(C).
    16. Kristjan Liivamägi, 2015. "Investor Education and Portfolio Diversification on the Stock Market," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 7(1).
    17. Azra Zaimovic & Adna Omanovic & Almira Arnaut-Berilo, 2021. "How Many Stocks Are Sufficient for Equity Portfolio Diversification? A Review of the Literature," JRFM, MDPI, vol. 14(11), pages 1-30, November.
    18. Ravi Jagannathan & Tongshu Ma, 2003. "Risk Reduction in Large Portfolios: Why Imposing the Wrong Constraints Helps," Journal of Finance, American Finance Association, vol. 58(4), pages 1651-1683, August.
    19. Rui Pedro Brito & Hélder Sebastião & Pedro Godinho, 2015. "Portfolio Management With Higher Moments: The Cardinality Impact," GEMF Working Papers 2015-15, GEMF, Faculty of Economics, University of Coimbra.
    20. Yu Zheng & Timothy M. Hospedales & Yongxin Yang, 2018. "Diversity and Sparsity: A New Perspective on Index Tracking," Papers 1809.01989, arXiv.org, revised Feb 2020.

    More about this item

    Keywords

    Portfolio Choice; Investment Decisions; International Financial Markets; Financial Economics;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imx:journl:v:4:y:2005:i:1:p:65-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ricardo Mendoza (email available below). General contact details of provider: https://www.remef.org.mx/index.php/remef/index .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.