|
15/12/2008 Sectorial diversification versus Geographic
For very many time one comes speaking of the diversification geodría like the route to prevent very significant losses in the investment portfolios of the people. If a bad country region you compensate, it with another investment in which it goes better. In order to demonstrate models like the CAPM or the Model of Markowitz have been used it.
If embargo we have been able to verify as in the last crises a geographic diversification has not contributed this aid. The fundamental base for this reasoning is that the globalisation has caused that if an economy goes bad, given its connections with others, will also bring about a worsening in that other economy.
In order to analyze this case, we have measured the Coefficient of Correlation (it measures the relation between two variables, if she is near 1 means that the relation between both variables is very high, if is near 0 is that there is no relation between the variables and if is near -1 is that there is much inverse relation but when one raises the other loss) of the yield of the variable rent of different geographic areas where we have obtained the following results:
As we can observe the relation is quite high, and in addition it has intensified these last years since she is higher in the period 04-08 that in the previous one of 99-03. Especially significant it is the relation between EE.UU and Europe. That diversification contributes to invest in Europe and EE.UU with a coefficient of correlation of almost in 90%. In this case surely it contributes more diversification the fact that when investing in we do it to EE.UU in dollars that we do the fact that it in stock market in another country.
But he is not all lost one, we solely must change the type of diversification. If instead of do it by we make it to countries by sectors of activity, the results are quite different:
In this case, also a very high correlation between some sectors like Bank exists, Financial and Safe Services because all dedicate to the financial world or between telecommunications and Technology, between both groups the Correlation is much smaller than between different geographic zones.
By all this we think that at the time of diversifying our investments we must take a step and instead of to do it by geographic regions more, to do it by sectors of activity.
In the year 2,000 all the bags fell by the technological crisis since this sector had taken an excessive weight in the economy, if we had diversified by sectors giving him to this that excesito weight we would not have avoided part of the loss.
If in 2.007 the financial sector had an excessive weight in the economy and the bags arriving at 30% and we by our sectorial diversification would not have given that excessive weight him, also we would have avoided part of the losses.
|
