The correlation between returns on companies in the same industry and domiciled in the same country is usually greater than the correlation between returns on companies in the same industry but in different countries.

Question

Quizplus · Accepted Answer

This is because companies in the same industry and domiciled in the same country are likely to be affected by similar macroeconomic factors such as government policies, interest rates, and currency movements compared to companies in the same industry but in different countries.

The Correlation Between Returns on Companies in the Same Industry