The last few weeks have been more volatile than usual as investors have been dealing with an array of concerns, including inflation, debt in China and the debt ceiling debate here at home. That’s why investors should consider diversifying their portfolios. Buy-rated international tech stocks such as Nokia Corp. ADR (NYSE:NOK), Silicon Motion (NASDAQ:SIMO) Technology Corp. ADR (SIMO) and SAP SE (DE:SAPG) ADS (SAP) would be strong additions to a portfolio.The market has experienced increased volatility over the last few weeks. Investors are still nervous about COVID and inflation, plus new issues including the debt ceiling debate and a possibility of an Evergrande default in China. At times like these, investors may look to lower their risk profile.
One way to do that is to invest in lower-risk stocks, but another option is reducing risk by diversifying your portfolio in general. A great way to do that is by investing in stocks from outside the United States. While there is some performance overlap between domestic and international stocks, they aren’t totally correlated.
For instance, I measured the correlation between the SPDR S&P 500 ETF (SPY) and the iShares MSCI EAFE ETF (EFA), which measures the international stock market. EFA is 85% correlated to SPY. But if you're picking individual stocks, that correlation goes down even more.