documented that diversification among risky assets in a particular country leads to risk reduction, but the potential gains are … limited due to high correlations within an economy. Therefore, international portfolio diversification, primarily in stocks … contracts to the international dimension. The findings lend support to the arguments in favor of international diversification …

We study the relative diversification potential of American Depository Receipts (ADRs) as compared to the underlying … shares as well as the relative diversification potential of closed-end country funds as compared to the foreign market … underlying shares are more useful for diversification purposes than ADRs and country funds when the U.S. stock market returns are …