Will there be Dependencies between Oil Prices and Clean Energy Indexes?
Will there be Dependencies between Oil Prices and Clean Energy Indexes?

Author(s): Mariana Chambino, Rui Dias, Cristina Morais da Palma
Subject(s): Energy and Environmental Studies
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Clean energy stocks; Oil prices; Hedge; Portfolio diversification
Summary/Abstract: This paper analyses whether clean energy stock indexes, namely WilderHill Clean Energy, Clean Energy Fuels, and Nasdaq Clean Edge Green Energy indexes, can be considered coverage assets for the dirty energy stock indexes such as the Brent Crude Spot and Euro Stoxx Oil & Gas indexes during the events that occurred in 2020 and 2022. The results suggest low levels of integration, which shows that clean energy indexes are isolated. Based on these findings, the clean energy index may offer a better opportunity to cover oil prices. However, it is important to highlight that market conditions, transaction costs, and asset performance affect hedge strategy returns. Therefore, it is important to carefully assess the potential risks and benefits of any hedge strategy before making investment decisions. In addition, past performance does not guarantee future results, and market conditions can change quickly and unpredictably.

• Details
• Contents