The Impact of Stock Prices of Polluting Energy Sources on Renewable Energy Stock Index Prices

Serap Vurur N. (), Özdemir Letife (), Özen Ercan () and Grima Simon ()
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Serap Vurur N.: Bolvadin Faculty of Applied Sciences, University of Afyon Kocatepe Kırkgöz Campus, Bolvadin, Afyonkarahisar 03100, Turkey
Özdemir Letife: Faculty of Economics and Administrative Sciences, University of Afyon Kocatepe Afyonkarahisar 03200, Turkey
Özen Ercan: School of Applied Sciences, the University of Usak, Usak 64200, Turkey
Grima Simon: University of Malta, Malta, Faculty of Economics Management and Accountancy And the University of Latvia, Riga, Latvia. Faculty of Economics and Social Science

Folia Oeconomica Stetinensia, 2024, vol. 24, issue 2, 344-370

Abstract: Research background The link between the price of polluting energy supplies and the renewable energy stock index may be intricate and subtle. Investors need to conduct thorough inquiries and analyses to completely understand the correlation between these industries. Purpose This study aims to explore the intricate dynamics between renewable energy stocks and conventional fossil fuel-based resources. Research methodology Our analysis encompasses daily data spanning from June 9, 2012, to March 31, 2023, extracted from the WilderHill New Energy Global Innovation Index (NEX), Crude Oil (WTI OIL), Coal (COAL), and Natural Gas (NGAS). Key statistical tests include the Johansen co-integration test, the fully modified ordinary least squares (FMOLS) test, and the Granger causality test. Results The study shows a long-term co-integration relationship between renewable energy stocks and polluting energy sources. Oil prices positively impact the renewable stock index, while coal prices negatively affect it. Natural gas prices also positively correlate with the index, and short-term relationships exist with oil prices. Novelty The study provides valuable insights for investors, state authorities, and policymakers on optimising ESG portfolio diversification and sustainable development policies in energy, environment, and climate. It helps stakeholders understand investor behaviour, market trends, and policy impacts, enabling effective long-term investment strategies.

Keywords: renewable energy; polluting energy; ESG investing; risk management (search for similar items in EconPapers)
JEL-codes: C58 F64 Q49 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:foeste:v:24:y:2024:i:2:p:344-370:n:1017

DOI: 10.2478/foli-2024-0029

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