Assessing the impact of renewable energy tokens on BRICS stock markets: A new diversification approach

Shoaib Ali, Muhammad Umar, Muhammad Naveed and Shan Shan

Energy Economics, 2024, vol. 134, issue C

Abstract: The key concern of this study is to investigate the nexus between the BRICS equity market and renewable energy tokens. Based on TVP-VAR, we examine the static and dynamic connectedness between our variables of interest. In addition to connectedness, we have also determined the diversification potential of renewable energy tokens using the DCC-GARCH model. The results infer that the connectedness between renewable energy tokens and the BRICS market remains substantial. However, it became more apmlified during COVID-19. Particularly, our findings show that BRICS equity markets act as transmitters while renewable energy tokens function as net receivers of return spillover within the system examined. Additionally, our findings infer that the inclusion of renewable energy tokens offers portfolio diversification benefits to investors in the BRICS region. However, during troublesome times, renewable energy sources provide hedging and compensate the investor's exposure to the higher level of uncertainty. Wrapping up, our findings hold indispensable guidance for investors, portfolio managers, and policy analysts.

Keywords: Static and dynamic connectedness; Energy tokens; BRICS; Portfolio diversification; Optimal weights (search for similar items in EconPapers)
JEL-codes: C40 G10 G12 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988324002317
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:134:y:2024:i:c:s0140988324002317

DOI: 10.1016/j.eneco.2024.107523

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().