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US sectors and geopolitical risk: The investor's perspective

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  • Choudhury, Tonmoy

Abstract

Geopolitical risk has become the single biggest concern of modern-day investors. Disruptions in the business can destabilize portfolio values, as seen in most geopolitical crises. This paper employs an extended five-factor model to examine whether investors in US industries can anticipate these upcoming shifts in geopolitical risk to safeguard themselves better. Findings indicate that the financial sector investors are most associated with expected geopolitical risks. The basic materials and energy sectors are also vulnerable, while consumer goods and services are impacted by upcoming geopolitical threats but not acts. These insights are crucial for portfolio diversification and industry resilience.

Suggested Citation

  • Choudhury, Tonmoy, 2025. "US sectors and geopolitical risk: The investor's perspective," Finance Research Letters, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324017197
    DOI: 10.1016/j.frl.2024.106690
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    More about this item

    Keywords

    US sectors; Geopolitical risk; Fama and French; Five factor model; Geopolitical risk management;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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