If you are a global investor, which pair of countries would you choose and why

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Correlation between stock returns in different countries
USA
KSA
Oman
USA
.10
.80
KSA
.10
-.25
Oman
.80
-25
If you are a global investor, which pair of countries would you choose and why
Transcribed Image Text:Correlation between stock returns in different countries USA KSA Oman USA .10 .80 KSA .10 -.25 Oman .80 -25 If you are a global investor, which pair of countries would you choose and why
Expert Solution
Global Investors and correlation

Global investors are investors which invest in securities of different countries. They do so to keep their portfolio holdings diversified from excess exposure to a particular security, asset class or geography.  Correlation is the strength and degree of relationship between two variables. Global investors like to hold securities of countries with low correlation to keep their portfolio diversified. Lower or negative correlation means that negative events in one country will have very less impact on another country.

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