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Article
Diversification Revisited
Research in International Business and Finance (2012)
Abstract
Many investment companies hold diversified asset portfolios and frequently try to mirror or outperform a market index for each asset class such as stocks and bonds. As Wibaut and Wilford (2009) show, often the same issuers appear in each of those indices and this may lead to undesirable results such as during a crisis period. Our research further explores the topic of diversification with a special focus on the financial crisis period of 2007 through 2009. Our results indicate that there is benefit in terms of correlations from holding bond and stock portfolios. Interestingly, these findings show the benefit is most pronounced during times of market stress.
Keywords
  • Investments,
  • Financial crisis,
  • Diversification,
  • Asset correlation
Publication Date
May, 2012
DOI
10.1016/j.ribaf.2011.12.004
Citation Information
"Diversification Revisited" Research in International Business and Finance Vol. 26 Iss. 2 (2012) p. 304 - 316
Available at: http://works.bepress.com/allissa-lee/2/