Sailing through uncertainty: Shipping's role in financial shock transmission and hedging strategies

Spyros Papathanasiou, Theodore Syriopoulos, Dimitris Kenourgios and Drosos Koutsokostas

Global Finance Journal, 2025, vol. 67, issue C

Abstract: Given shipping's pivotal role in global trade, this study investigates interdependencies between the Baltic Dry Index and various financial and commodity markets, including equities, bonds, real estate, currency, bitcoin, crude oil, natural gas, gold, silver, copper, and zinc. Using the R2 decomposed connectedness approach for the period 1/1/2012–1/31/2025, the analysis reveals moderate volatility spillovers, notably amplified by geopolitical conflict more than the health crisis. Key findings identify gold and equities as primary shock emitters, while currency and bonds function as major receivers. Shipping generally displays neutral behavior within the network. Portfolio analysis shows that most sampled assets significantly reduce risk for shipping investors. Conversely, shipping effectively minimizes risk for bitcoin and natural gas portfolios. Significant heterogeneity in hedging effectiveness is documented across distinct crisis episodes. These results underscore the imperative for shipping investors to employ tailored hedging strategies and offer policymakers insight into shipping's contained systemic footprint on contagion dynamics.

Keywords: Baltic Dry Index; Crude oil; Gold; Bitcoin; Decomposed connectedness; Hedging coverage (search for similar items in EconPapers)
JEL-codes: C32 G11 G12 G15 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:67:y:2025:i:c:s1044028325000869

DOI: 10.1016/j.gfj.2025.101159

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