Unformatted text preview: economy. The lower the correlation between domestic and foreign stocks reflects the lower correlations between the domestic and foreign economies. The lower correlation implies that international investing is likely to lead to greater diversification than just investing across industries within a country. Lower correlation appears to be persisting despite the greater integration of the Global economy. (10) It depends on the currency of denomination and the currency of determination. The Price of the ADR is the price of the share stock in its foreign currency times the spot dollar value of the foreign currency. As the spot exchange rate changes, the dollar price of the ADR will also change. ADR are subject to exchange risk as the shares of foreign stocks....
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- Spring '09
- International Finance, Common Risk Factors, global economy, country. Lower correlation, average HK stock, Alexander Rocca International, foreign currency times