Year-end Sale % OFF 
Abstract
Currently, the role of diamonds in the global financial system is under intense discussion in the financial media because individual investors and portfolio managers have begun to consider them as potential investment assets. To address the growing interest in diamonds, this article examines the historical performance of investments in various diamond quality grades. Furthermore, it investigates their relation to stock market and currency risk. Specifically, we focus on two important practical investment questions: Can diamonds function as a hedge or a safe haven against stock market volatility or fluctuations of the US dollar? Can diamonds be regarded as effective diversifiers in a stock or a currency portfolio context? Key findings are as follows: (1) The investment performance of diamonds is lower than the one of gold and silver. (2) Diamonds have only acted as a weak hedge and a weak safe haven against stock market downturns and currency risk associated with the US dollar. (3) Within global stock and currency portfolios, 1.0 carat fine diamonds show valuable diversification potential in that they can increase portfolio performance to an economically significant extent. Interestingly, this final result is fairly robust to the choice of performance measure.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
