You are provided a correlation coefficient matrix for the 7 major world stock exchanges (monthly observations, 1990-2020) as follows:

	Brazil	Canada	Germany	Japan	France	U.K.	U.S.	E(R), %	Var (R)
Brazil	1							1.6	16.3
Canada	0.24	1						1.2	9.6
Germany	0.12	0.34	1					0.8	5.5
Japan	0.13	0.42	0.42	1				1.1	12.5
France	0.06	0.53	0.82	0.52	1			0.2	10.3
U.K.	0.17	0.62	0.61	0.49	0.62	1		0.7	9.5
U.S.	-0.12	0.87	0.72	0.34	0.59	0.67	1	0.5	8.6

1. If you are an aggressive investor as a risk lover, which market will you invest at most likely?

_____________________________

Explain why?

2. According to the above data, the U.S. stock market dominates one other market. So you would avoid that market most likely. Which stock market is it?

_____________________________

Explain why?

3. Which stock market do you think is the most segregated (or least internationally integrated) market, according to the above data?

_____________________________

Explain why?

4. Which pair of markets tends to move in the same direction most probably?

_____________________________

Explain why?

5. From the US investors perspective, which foreign market do you think provide the best opportunity for the maximum gain from international portfolio diversification?

_____________________________

Explain why?

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