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Dilli, Rohit (2025) The Impact of International Portfolio Diversification on European Markets: A Modern Portfolio Theory Approach. Masters thesis, Dublin, National College of Ireland.
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Abstract
In this thesis, we examine the quantitative returns of a European investor while diversifying his portfolio internationally. Investors are continually striving to make the most money with the least amount of risk since global financial markets are getting more intertwined. This is harder because of home prejudice. Employing a Modern Portfolio Theory-based analytical and empirical methodology, this study surpasses theoretical debates over the necessity for investment diversification. The study employs the Monte Carlo simulation on 10 recognized Exchange-Traded Funds (ETFs) that monitor European equities (IEUR), U.S. stocks (SPY), emerging market equities (EEM), and U.S. aggregate bonds (AGG). It looks at the daily prices of sample ETF data from 2015 to 2025 to look at 20,000 different portfolio allocations. The study shows that there are two optimum portfolios: one with the least amount of risk and the other with the highest Sharpe Ratio. The findings suggest that strategically diversifying across global markets may yield a substantial risk-adjusted performance benefit compared to a strategy concentrated solely in European markets. The results also show that using assets that don't move together, like international bonds, can make it easier to design a portfolio with less volatility. This research may be beneficial for investors, financial advisors, and institutional planners in Europe, as it provides quantitative evidence that supports the notion that it is an effective tool for portfolio management. The study's findings enhance the existing body of knowledge on portfolio management by providing a modern, practical viewpoint on the enduring advantages of international diversification.
| Item Type: | Thesis (Masters) |
|---|---|
| Supervisors: | Name Email Chattopadhyay, Amit UNSPECIFIED |
| Subjects: | H Social Sciences > HG Finance H Social Sciences > Economics > Business H Social Sciences > HG Finance > Investment H Social Sciences > HG Finance > Investment > Stock Exchange |
| Divisions: | School of Business (- 2025) > Master of Science in International Business |
| Depositing User: | Ciara O'Brien |
| Date Deposited: | 16 Dec 2025 14:08 |
| Last Modified: | 16 Dec 2025 14:08 |
| URI: | https://norma.ncirl.ie/id/eprint/9037 |
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