bigredhockey55

I had trouble with this too. Like MarkCFAIL’S explanation as the market portfolio now being the local market. thanks and moving on.

onelife1

I think, they should have used another word for this. In the whole field of finance, including discussions on emerging markets investing etc., “segmented” is just a proxy for low correlation.

bluejazzy

When segmented there is ONE market. You are comparing the market to itself. The correlation of any market to itself is 1.
Does that make sense to you ?

former

The index that you are measuring correlation with is the local market index in the case of segmented markets (the “global” portfolio is really just the local market portfolio). The reason the correlation is 1 is because there is no impact from other markets, as it is fully segmented.
It doesn’t explicitly state it for the integrated markets, but i would have to think the global portfolio is actually a true global portfolio, when you calculate integrated market equity risk premia.
I think you are comparing two different benchmarks, local market for segmented, global market for integrated.