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The effectiveness of international diversification: whole markets versus sectors

Author

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  • Imad A. Moosa
  • George B. Tawadros
  • Terry A. Hallahan

Abstract

A hedging approach is used to examine the effect of sectoral factors on the effectiveness of international diversification. By using data covering seven countries and various sectors, we find that international diversification is more effective when assets from developed markets only are used and when multiasset portfolios are used instead two-asset portfolios. The results also reveal that international diversification across whole markets is more effective than diversification across sectors. These results reflect the pattern of return correlation.

Suggested Citation

  • Imad A. Moosa & George B. Tawadros & Terry A. Hallahan, 2015. "The effectiveness of international diversification: whole markets versus sectors," Applied Economics, Taylor & Francis Journals, vol. 47(6), pages 614-622, February.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:6:p:614-622
    DOI: 10.1080/00036846.2014.978073
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    Cited by:

    1. Hatemi-J, Abdulnasser & Taha, Viyan, 2021. "Portfolio Diversification Benefits between Financial Markets of the US and China: Empirical Evidence from two Alternative Methods," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(4), pages 537-546.
    2. Sulaiman T. Al-Abduljader, 2018. "International Diversification in Frontier Real Estate Markets," International Real Estate Review, Global Social Science Institute, vol. 21(1), pages 93-112.
    3. Sulaiman Al-Jassar & Imad A. Moosa, 2020. "Country Effects, Industry Effects and the Effectiveness of International Diversification Within the GCC Region," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-18, January.

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