Diversification Tool Research Articles

Diversification evidence of bitcoin and gold from wavelet analysis

To measure the diversification capability of Bitcoin, this study employs wavelet analysis to investigate the coherence of Bitcoin price with the equity markets of both the emerging and developed economies, considering the COVID-19 pandemic and the recent Russia-Ukraine war. The results based on the data from January 9, 2014 to May 31, 2022 reveal that compared with gold, Bitcoin consistently provides diversification opportunities with all six representative market indices examined, specifically under the normal market condition. In particular, for short-term horizons, Bitcoin shows favorably low correlation with each index for all years, whereas exception is observed for gold. In addition, diversification between Bitcoin and gold is demonstrated as well, mainly for short-term investments. However, the diversification benefit is conditional for both Bitcoin and gold under the recent pandemic and war crises. The findings remind investors and portfolio managers planning to incorporate Bitcoin into their portfolios as a diversification tool to be aware of the global geopolitical conditions and other uncertainty in considering their investment tools and durations.

Investigating the nature of interaction between crypto-currency and commodity markets

This paper investigates the dynamic relationship and volatility spillovers between cryptocurrency and commodity markets using different multivariate GARCH models. We take into account the nature of interaction between these markets and their transmission mechanisms when analyzing the conditional cross effects and volatility spillovers. Our results confirm the presence of significant returns and volatility spillovers, and we identify the GO-GARCH (2,2) as the best-fit model for modeling the joint dynamics of various financial assets. Our findings show significant dynamic linkages and volatility spillovers between gold, natural gas, crude oil, Bitcoin, and Ethereum prices. We find that gold can serve as a safe haven in times of economic uncertainty, as it is a good hedge against natural gas and crude oil price fluctuations. We also find evidence of bidirectional causality between crude oil and natural gas prices, suggesting that changes in one commodity's price can affect the other. Furthermore, we observe that Bitcoin and Ethereum are positively correlated with each other, but negatively correlated with gold and crude oil, indicating that these cryptocurrencies may serve as useful diversification tools for investors seeking to reduce their exposure to traditional assets. Our study provides valuable insights for investors and policymakers regarding asset allocation and risk management, and sheds light on the dynamics of financial markets.

Bio-evaluation of Untapped Alkaloids from Vinca minor Enriched by Methyl-jasmonate-induced Stress: an Integrated Approach.

The low amount of metabolites isolated from natural products is one of the challenges preventing their biological evaluation. The modulation of biosynthetic pathways by stimulating stress-induced responses in plants was proven to be a valuable tool for diversification of already known natural products. Recently, we reported the dramatic effect of methyl jasmonate (MeJA) on Vinca minor alkaloids distribution. In this study, three compounds identified as 9-methoxyvincamine, minovincinine, and minovincine are successfully isolated in good yield and subjected to several bioassays based on a network pharmacology study. The extracts and isolated compounds show weak to moderate antimicrobial and cytotoxic activities. Also, they are found to significantly promote wound healing in scratch assay, and transforming growth factor-β (TGF-β) modulation is suggested to be the potential pathway based on bioinformatic analysis. Hence, Western blotting is used to assess the expression of several markers related to this pathway and wound healing. The extracts and isolated compounds are able to increase the expression of Smad3 and Phosphatidylinositol-3-kinase (PI3K), while downregulating the levels of cyclin D1 and the mammalian target of rapamycin (mTOR) except for minovincine, which increases the mTOR expression, inferring that it might act through a different mechanism. Molecular docking is used to give insights on the ability of isolated compounds to bind with different active sites in mTOR. Collectively, the integrated phytochemical, in silico, and molecular biology approach reveal that V.minor and its metabolite could be repurposed for the management of dermatological disorders where these markers are dysregulated, which opens the gate to develop new therapeutics in the future.

Туризмът като средство за диверсификация икономиката на планинските селски райони (изследване на обектите на селския туризъм в някои селища на Смолянска област)

Smolyan district is characterized on one side by uneven development of the tourism branch with prevelance of mass tourism, which leads to toverconcentration of tourists flow only in two of the municipals – Chepelare and Smolyan and on one side over 99 % of the accommodations in the district are concentrated there and on the other – by incomplete utilization of the favourable premises for development of alternative tourism in the dirtrict’s small settlements. In this connection the objective of the research is to study and analyze the current state and the possibilities for development of alternative tourism as an efficient tool for diversification of the local rural economy. The research is based on direct inquiries to tourists and owners of tourism facilities in the settlement Momchilovtzi, Orehovo, Trigrad, Dospat, Banite, Devin and Shiroka Luka. Taking in consideration the gathered via system of indicators information, several conclusions regarding stability of the working places, level of income, qualifications of the employees, structure of the proprietorship and professionalization of the tourism business in the small settlements of the districts are provided.

BONDS AND SUKUK MARKETS UNDER COVID 19: AN EMPIRICAL STUDY OF EMERGING MARKETS

The influence of the COVID-19 pandemic on the bonds and sukuk market index is investigated to determine the dynamic behavior of fixed-income return volatility. Our results suggest that COVID-19 does not influence bond and sukuk market volatility in most of our samples. Furthermore, market sentiment does not exist in the fixed income market. The dominance of long-term investors in the fixed-income market could be the cause, especially given the minor impact of the pandemic on market volatility. In erms of risk, sukuk is less risky than its counterpart, and no statistical difference is found in risk before and during the COVID-19 pandemic for sukuk and bonds. Finally, sukuk may be considered a safe haven instrument in the financial market coupled with bonds as diversification tools in the investors’ portfolios

Dynamic spillovers between precious metals and travel & tourism stocks in South-East Asia: do infectious disease outbreaks matter?

The interconnection between travel and leisure industry and precious metals markets has attracted a lot of interest among investors, policy makers, practitioners and market participants. We investigate the role of infectious diseases-based uncertainty on the dynamic connectedness between Southeast Asia travel and tourism stocks indices and four major precious metals namely; gold, silver, palladium, and platinum over the period 31 March 2015 to 5 February 2021. We adopt the time-varying parameter vector autoregressions (TVP-VAR) and the nonparametric causality-in-quantiles approach for its methodological superiority over linear approaches in capturing the presence of causality at different quantiles of the commodity distribution. The following is discernible from our analyses. First, we find strong spillovers between the two markets, implying there are diversification options. Second, silver and platinum are best effective portfolio diversification tools among precious metals. Third, strong evidence of nonlinearity makes it crucial for consideration when examining the role of diseases-based uncertainty in affecting the interactions between travel and tourism stocks and metals markets. Lastly, connectedness between uncertainty due to infectious diseases and the markets is stronger mostly around the lower and normal quantiles. These results have important policy implications for policymakers and market participants.

Time-frequency connectedness between energy commodities and the influence of uncertainty measures

Commodities have become a new tool for global diversification among stocks, currencies, and other assets. Their dynamics and statistical characteristics have become crucial to financial research. Furthermore, in the connected world of today, the importance of uncertainties is greater than ever. This article examines the comovements between energy commodities and the influence of uncertainty measures through the bi, partial and multiple wavelet techniques. We show the significance of uncertainties by highlighting their influence on financial decisions. To measure uncertainty, we use GEPU, OVX, and VIX. By using the wavelet approaches, we examine how energy commodities interact in both the time and frequency domains, which helps us better comprehend interdependencies. The results show that most energy commodities display high comovements in the short-, and long-terms, except with natural gas. According to the partial wavelet, OVX has the most significant impact on the connectedness amongst energy commodities. For the wavelet multiple cross-correlations, Petroleum maximises the multiple cross-correlations at most scales (short, medium and long terms) followed by Brent crude with a potential to lead or lag. These findings have substantial policy implications for policymakers as well as meaning for investors.

Resource curse and growth challenges in MENA oil exporter countries: A case for governance reforms in the post Arab Spring uprisings context

AbstractIn the theoretical backdrop of the resource curse problems confronting the resource‐rich countries, this paper, primarily examines the impact of oil rents on economic growth and the related resource curse symptoms in Middle East and North Africa (MENA) oil exporter countries. The existence of and too much dependence on natural resources prevents many oil, gas, and mineral‐rich nations from reaping their full growth potential. They are generally less stable economically, more autocratic, and more vulnerable to conflicts than countries without these resources. The paper then critically discusses the role of governance in averting the resource curse problems by adopting oil rents throughout the pre and post Arab Spring revolution during 1996–2019 as an economic tool for diversification. We apply the fixed‐effects model and the pooled ordinary least squares (OLS) estimations, in addition to the generalized estimating equations (GEE). It is found that oil rents have a positive impact on the growth of MENA countries, posing serious resource curse challenges in the emerging context. While diversification through governance plays an important role, oil rents hamper economic diversification leading to rent‐seeking activities. The results of the paper provide important policy implications for oil exporting counties in the MENA region.

Climate uncertainty and information transmissions across the conventional and ESG assets

This paper examines the effect of climate uncertainty on the spillover effects across the European conventional and environmental, social, and governance (ESG) financial markets via novel measures of physical and transitional climate risk proxies obtained from textual analysis. Analyzing daily data for stocks in the MSCI Europe ESG Leaders Index and various Euro based ESG bond indexes over the period January 3, 2014–September 30, 2021, we show that the shock transmissions between the conventional and ESG assets are significantly lower during periods of high climate uncertainty, suggesting that ESG investments can offer conventional investors diversification benefits against climate-driven shocks. Further comparing a forward-looking investment strategy conditional on the level of climate risk against the passive investment strategy, we show that investors who are worried about physical climate risks could utilize ESG equity sector portfolios as a diversification tool against physical climate uncertainty. In contrast, ESG bonds are found to be particularly useful in managing transition risk exposures that are associated with policy uncertainty and/or business transitions with respect to environmental policies. The findings have important implications regarding the role of climate uncertainty as a driver of informational spillovers across the conventional and ESG assets with important insights to manage climate risk exposures.

ECONOMIC VALUE OF TECHNICAL NICHE CULTURES AND PROSPECTS FOR THE DEVELOPMENT OF THEIR PRODUCTION

The purpose of the publication is to characterize the economic value of niche technical crops from today's point of view and to substantiate the economic prospects of their production in the context of modern threats and challenges. The relevance of the study is primarily due to the worsening of food security, the deterioration of the soil, as well as the fact that traditional crops, such as soybeans, which are capricious to weather conditions, moisture-loving corn, and even sunflower, according to forecasts in some regions, will give less and less profits, so farmers need to think about an alternative and to diversify production. To achieve the goal, general scientific and special methods of cognition were used: dialectical, which made it possible to determine the relevance and theoretical basis of the researched question; abstract-logical, with the help of which the theoretical material was systematized and the structure and relationships of the elements of scientific research were formed; analysis and synthesis, which made it possible to identify and group the advantages of niche technical crops, which were considered as arguments in favor of the development of their production; and generalization, with the purpose of forming a comprehensive approach to presenting the researched issue and formulating conclusions. In order to increase the level of specificity and objectivity of the study regarding the prospects for the development of the production of niche technical crops, attention was focused on their individual representatives, safflower and mustard. The main results of the study were: generalization of arguments in favor of the economic feasibility of developing the production of safflower and mustard, among which their multifunctionality, which is common for most niche technical crops, is highlighted; detailed disclosure of the advantages of these cultures, the significance of which is growing in the context of worsening food security; and presentation of the economic value of niche technical crops as a complex characteristic, covering closely related economic, agrotechnical, ecological, agronomic, and socio-economic components. In general, the development of the production of these crops is presented as a tool for diversification of agricultural production and a tool for strengthening of food security under the conditions of modern threats and challenges, which determines the practical significance of the study

THE CO-MOVEMENT OF CHINA AND US STOCK INDICES: A PORTFOLIO DIVERSIFICATION ANALYSIS

The aim of this article is to find diversification opportunities by examining the time-varying and time-scale-based volatility and correlation of the US and Chinese stock market indices with crude oil, gold and Bitcoin price returns, as well as the exchange rate of the Chinese Yuan Renminbi against the US Dollar (CNY/USD) using a vector error correction model (VECM), namely, maximum overlap discrete wavelet transformation (MODWT). Furthermore, individual and institutional investors may also reduce the risk of their investment portfolio by investing in commodities and stock markets from countries with a negative or substantially low correlation. Our VECM result shows that Bitcoin, crude oil and CNY/USD lead the other variables under consideration, indicating that changes in the prices of Bitcoin, crude oil and CNY/USD affect the US and Chinese stock market indices, as well as gold. Our research utilising the MODWT technique shows that Bitcoin leads crude oil at almost all levels, indicating that crude oil prices will respond to Bitcoin price movement in the long and medium term. However, investors may be deterred from using Bitcoin as a diversification tool due to its extreme volatility. The research also indicates that diversification with gold may help US investors. However, the continuous wavelet transformation finding shows that the diversification benefit effects will persist for a holding period of little more than 64 days. Our study results tend to emphasise the significance of using reasonably modern methods to identify diversification possibilities for investors with diverse investment horizons or holding stocks for various periods.

Diversification mechanisms and their effectiveness

The work is devoted to finding effective mechanisms for the implementation of diversification and commercialization in large companies. World practice outlines that big are quite actively use the purchase (mergers and acquisitions) of other companies as a powerful diversification tool. Mergers and acquisitions allow companies - buyers quickly increasing the number of new products and services in their portfolio. This mechanism is used in the military and civilian sectors simultaneously. Boeing, Northrop Grumman, Raytheon Corp., Intel, Google, NEC and others are constantly buying third-party companies and sell their own assets. Based on the analysis of domestic and foreign experience in this area, it is concluded that, among currently used, the most optimal diversification mechanisms are the purchase of innovative companies, the involvement of external teams in the organization. Also among these mechanisms are buying the specialists with innovative technological competencies, the acquisition (purchase) of external innovative technologies and competences.

Nickel-Catalyzed Cross-Electrophile 1,2-Silyl-Arylation of 1,3-Dienes with Chlorosilanes and Aryl Bromides.

Catalytic, three-component, cross-electrophile reactions have recently emerged as a promising tool for molecular diversification, but studies have focused mainly on the alkyl-carbonations of alkenes. Herein, the scope of this method has been extended to conjugated dienes and silicon chemistry through silylative difunctionalization of 1,3-dienes with chlorosilanes and aryl bromides. The reaction proceeds under mild conditions to afford 1,2-linear-silylated products, a selectivity that is different to those obtained from conventional methods via an intermediary of H(C)-η3 -π-allylmetal species. Preliminary mechanistic studies reveal that chlorosilane reacts with 1,3-diene first and then couples with aryl bromide.

Nickel‐Catalyzed Cross‐Electrophile 1,2‐Silyl‐Arylation of 1,3‐Dienes with Chlorosilanes and Aryl Bromides

AbstractCatalytic, three‐component, cross‐electrophile reactions have recently emerged as a promising tool for molecular diversification, but studies have focused mainly on the alkyl‐carbonations of alkenes. Herein, the scope of this method has been extended to conjugated dienes and silicon chemistry through silylative difunctionalization of 1,3‐dienes with chlorosilanes and aryl bromides. The reaction proceeds under mild conditions to afford 1,2‐linear‐silylated products, a selectivity that is different to those obtained from conventional methods via an intermediary of H(C)‐η3‐π‐allylmetal species. Preliminary mechanistic studies reveal that chlorosilane reacts with 1,3‐diene first and then couples with aryl bromide.

“It’s Just as Whitewashed as Ever”: Social Media Sourcing as a Diversification Tool for Journalists

ABSTRACT Modern journalism practices rely heavily on the use of sources. Traditionally, white, male officials are journalists’ primary sources. This silences underrepresented voices, leading to symbolic annihilation of minority communities in media coverage. Journalists often cite their inability to reach communities outside of their own perspective as a primary reason for this symbolic annihilation, but what happens when reporters’ networks of power are widened through digital connections? Previous research has explored the role of social media as a tool for newsgathering, and some studies suggest social media can provide the opportunity for journalists to reach previously inaccessible communities. Yet, the network theory of power suggests some nodes of these digital networks can create elite sources like officials or influencers that may uphold traditional sourcing practices and hegemonic power structures. Utilizing qualitative interviews with professional journalists, this study seeks to understand whether tapping into broader networks of power through social media helps journalists combat symbolic annihilation of sources or whether hegemonic structures continue. It also offers insight into influences on journalists’ use of social media for multiperspectival sourcing and suggestions for reliance on certain networks for diversification of sources.

Regional Response of Low Carbon Investments to the COVID-19 Pandemic: The Case of Stock Markets in Seeking Carbon Neutrality Goals

Low carbon investments are significant in climate change and sustainable economic growth. The research considers the impact of the COVID-19 pandemic on low carbon investments using environmental, social, and governance (ESG) factors in different regions to find the correlation between various markets and the impact of the pandemic. Our research employs the method of covariance/correlation analysis to investigate the relationship between low carbon investments in different regions. We also check the main parameters of descriptive statistics. We use the method of bivariate regression analysis to assess the impact of the COVID-19 pandemic on the performance of ESG stock indices in Emerging, European, and Global markets. The main findings reveal that the global prevalence and mortality risk of COVID-19 infection have a significant adverse effect on the performance of Emerging, European, and Global ESG stock markets. In contrast, the effect of COVID-19 cases reported deaths caused by COVID-19 infection to appear to be mixed. Our research shows that the correlation between the European ESG stock market and other ESG markets is exceptionally low or negative in the 1-year horizon. In contrast, tendencies in other markets are similar. So it means that the European ESG stock market is a good tool for diversification and risk mitigation during critical moments. Our results can be used in practice for portfolio management purposes. Institutional and other investors can use these results for low carbon portfolio management and risk mitigation.

Short-run and long-run determinants of bitcoin returns: transnational evidence

PurposeBitcoin has emerged as a phenomenal asset earning abnormal profits. However, the factors with predictability power over its price are not widely studied. Therefore, this study aims to explore the factors that determine bitcoin prices. The analysis explores the determinants belonging to four categories – macro economic, financial, technical and fundamental factors.Design/methodology/approachThe study employs random effects regression on the panel data of five countries. Then Granger causality test is applied on the time series of all the variables. Lastly, diagnostic tests are conducted to confirm the findings to be robust and reliable.FindingsThe findings suggest that oil price, bitcoin supply, trading volume and market capitalization significantly impact the price of bitcoin in the long run. In short run, bitcoin returns are only caused by oil price and market capitalization. Interestingly, bitcoin returns influence its attractiveness to investors, market capitalization, S&P 500 returns and trading volume, in the short run.Practical implicationsThe technical analysis is found to be redundant in the short run. In the long run, technical as well as fundamental analysis are useful. The bitcoin is found to be a good diversification tool as it has no linkages with the stock markets and gold market. It is also an inflationary hedger owing its limited supply.Originality/valueThe studies on cryptocurrency market have not conducted the analysis across countries. This study captures the cross-sectional effects along with time effects. The study also includes 17 variables belonging to four categories.

Diversification With REITS: A 10 Year Perspective

The application of Real Estate Investment Trusts (REITs) to stock portfolios as a useful diversification tool has grown in popularity for over two decades. In this study, we examine the risk/return tradeoffs over the 10-year period (2010-2019) under multiple diversification strategies. We compare various portfolios including REITs in combination with International Stocks (IS), Emerging Market Stocks (EMS), Small Cap Stocks (SCS), the S&P500 (S&P), the S&P Growth, the S&P Value, the Russell 3000, the Russell 1000 Growth, and the Russel 1000 Value. The results indicate the S&P Growth and the Russell 1000 Growth combined with REITs suggests the best overall risk reduction inferring correlation is domestic focused. Good results are also found for multi-index blends with the Russell 3000 and the S&P 500.

A clean, green haven?—Examining the relationship between clean energy, clean and dirty cryptocurrencies

Is clean energy a safe haven for cryptocurrencies, or vice versa? In this paper, we investigate the hedge and safe haven property of a wide range of clean energy indices against two distinct types of cryptocurrencies based on their energy consumption levels, termed “dirty” and “clean”. Statistical evidence shows that clean energy is not a direct hedge for either of types. However, it serves as at least a weak safe haven for both in extreme bearish markets. Moreover, clean energy is more likely to be a safe haven for dirty cryptocurrencies than clean cryptocurrencies during increased uncertainty. We further study the spillover patterns among clean energy, cryptocurrency, stock, and gold markets. Weak connectedness is found between clean energy and cryptocurrencies which implies the potential use of clean energy as a hedge and diversification tool for cryptocurrencies in the future.

Cryptocurrencies, Diversification and the COVID-19 Pandemic

This paper features an analysis of cryptocurrencies and the impact of the COVID-19 pandemic on their effectiveness as a portfolio diversification tool and explores the correlations between the continuously compounded returns on Bitcoin, Ethereum and the S&P500 Index using a variety of parametric and non-parametric techniques. These methods include linear standard metrics such as the application of ordinary least squares regression (OLS) and the Pearson, Spearman and Kendall’s tau measures of association. In addition, non-linear, non-parametric measures such as the Generalised Measure of Correlation (GMC) and non-parametric copula estimates are applied. The results across this range of measures are consistent. The metrics suggest that, whilst the shock of the COVID-19 pandemic does not appear to have increased the correlations between the cryptocurrency series, it appears to have increased the correlations between the returns on cryptocurrencies and those on the S&P500 Index. This suggests that investments in cryptocurrencies are not likely to offer key diversification strategies in times of crisis, on the basis of evidence provided by this crisis.