The practice of diversifying an investment portfolio across different geographic regions so as to reduce the overall risk and improve returns on the portfolio. The term also refers to the strategy employed by large companies of locating their operations in different regions or countries in order to reduce business and operational risk.
As with diversification in general, geographical diversification is based on the premise that financial markets in different parts of the world may not be highly correlated with one another. For example, if the US and European stock markets are declining because their economies are in a recession, an investor may choose to allocate part of his portfolio to emerging economies with higher growth rates such as China, Brazil and India.
Most large multinational corporations also have a high degree of geographic diversification. This enables them to reduce expenses by locating plants in low-cost jurisdictions and also lowers the effect of currency volatility on their financial statements. In addition, geographic diversification may have a positive impact on a corporation's revenues, since high-growth regions may offset the effects of lower-growth regions.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
diversification — 1. The holding of a *portfolio of varied investments to spread and thereby reduce *risk. See *portfolio theory. 2. An increase in the range and variety of operations undertaken by an organization or an individual. *Multinational corporations tend … Auditor's dictionary
GEOGRAPHICAL SURVEY — Names The name Ereẓ Israel (the Land of Israel) designates the land which, according to the Bible was promised as an inheritance to the Israelite tribes. In the course of time it came to be regarded first by the Jews and then also by the… … Encyclopedia of Judaism
Bank TuranAlem — Infobox Company company name = Bank Turanalem (Банк ТуранАлем) company company type = Private foundation = 1925 location = Almaty, Kazakhstan key people = , CEO industry = Finance and Insurance products = Banking revenue = homepage =… … Wikipedia
Deutsche Babcock Middle East — Type Holding Company Industry Engineering Headquarters … Wikipedia
Liliana Katinas — Nacimiento 29 de mayo de 1961 (50 años) Quilmes, provincia de Buenos Aires Residencia … Wikipedia Español
JUDEO-FRENCH — JUDEO FRENCH, the Old French spoken and written by medieval French and Rhenish Jewry. It should be stated from the outset that there probably never existed a Judeo French dialect, with specific Jewish traits. The term applies only to Jewish… … Encyclopedia of Judaism
ECONOMIC AFFAIRS — THE PRE MANDATE (LATE OTTOMAN) PERIOD Geography and Borders In September 1923 a new political entity was formally recognized by the international community. Palestine, or Ereẓ Israel as Jews have continued to refer to it for 2,000 years,… … Encyclopedia of Judaism
Maritime Fur Trade — The North West Coast during the Maritime Fur Trade era, about 1790 to 1840 The Maritime Fur Trade was a ship based fur trade system that focused on acquiring furs of sea otters and other animals from the indigenous peoples of the Pacific… … Wikipedia
china — /chuy neuh/, n. 1. a translucent ceramic material, biscuit fired at a high temperature, its glaze fired at a low temperature. 2. any porcelain ware. 3. plates, cups, saucers, etc., collectively. 4. figurines made of porcelain or ceramic material … Universalium
China — /chuy neuh/, n. 1. People s Republic of, a country in E Asia. 1,221,591,778; 3,691,502 sq. mi. (9,560,990 sq. km). Cap.: Beijing. 2. Republic of. Also called Nationalist China. a republic consisting mainly of the island of Taiwan off the SE coast … Universalium