  We present four methods of assessing the diversification potential within a
stock market, two of these are based on principal component analysis. They were
applied to the Australian stock exchange for the years 2000 to 2014 and all
show a consistent picture. The potential for diversification declined almost
monotonically in the three years prior to the 2008 financial crisis. On one of
the measures the diversification potential declined even further in the 2011
European debt crisis and the American credit downgrade.
