US sectors and geopolitical risk: The investor's perspective

Tonmoy Choudhury

Finance Research Letters, 2025, vol. 73, issue C

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.

Keywords: US sectors; Geopolitical risk; Fama and French; Five factor model; Geopolitical risk management (search for similar items in EconPapers)
JEL-codes: C22 G15 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324017197

DOI: 10.1016/j.frl.2024.106690

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