Bloomberg: European Stocks Could Plunge Around 25% Under A Yes 'Brexit' Vote Outcome

Britain will hold a vote on June 23 to decide if the country will leave or remain in the European Union. The vote has been dubbed "Brexit," and the outcome of the vote will likely have a large impact on the equity market.

According to Bloomberg, European stocks could lose 24 percent of their value if the British people vote to leave the European Union. The figure was derived by the risk-modeling firm Axioma and includes the market response to prior European major events, including the multi-year European debt crisis and the 2014 Scottish vote to create its own independent country.

Axioma examined a hypothetical portfolio consisting of 54 percent in bonds, 41 percent in stock and the rest in alternative investments. However, even though a stress test of this portfolio paints a bearish picture, current consensus is that a British exit from the European Union won't happen.

Related Link: What U.K. ETFs Are Saying About Brexit

"There is an assumption that Brexit is not going to happen — if it happens, no one is mentally fully geared up for it yet," Philip Jacob, one of the researchers who authored the report, told Bloomberg. "We'll see the equity market really, really move."

The report also cautioned U.S. investors who may be vulnerable to a British exit. A separate report by Nasdaq OMX Group showed that Americans increased their allocation to British equities since May of 2015. On the other hand, British investors have been the biggest sellers of British stocks.