Dynamic hedging strategies for U.S. investors in international stock ETFs following geopolitical conflicts

SeungOh Han

Finance Research Letters, 2025, vol. 72, issue C

Abstract: This study examines risk transmission among developed and emerging market ETFs after the Russian and Hamas invasions. Our findings reveal a wave-like pattern in interconnectedness among international ETFs, characterized by an initial decrease, subsequent rebound, and decline. Post-invasion, Germany and France emerge as primary net transmitters of volatility, while China, UAE, and Saudi Arabia act as major net receivers. Overall, China and UAE become economical hedges, while Germany and France serve as optimal risk reducers. For the U.S. ETF, China offers cost-effective hedging, while Canada effectively reduces its risks. South Africa helps the China ETF efficiently mitigate risks.

Keywords: Geopolitical conflicts; Russia–Ukraine conflict; Israel–Hamas conflict; International ETFs; Risk spillover; Hedging strategies (search for similar items in EconPapers)
JEL-codes: C32 G11 G12 N44 N45 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324014545

DOI: 10.1016/j.frl.2024.106425

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