Precious metals as safe-haven for clean energy stock investment: Evidence from nonparametric Granger causality in distribution test

• Published in: Resources policy Vol. 79; p. 102945
• Main Authors: Erdoğan, Seyfettin, Gedikli, Ayfer, Çevik, Emrah İsmail, Erdoğan, Fatma, Çevik, Emre
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.12.2022
• Subjects: Causality; Clean energy; Gold; Hedging; Precious metals; Precious metals; Gold; Hedging; Causality; Clean energy
• ISSN: 0301-4207; 1873-7641
• DOI: 10.1016/j.resourpol.2022.102945

The study aims to examine the connectedness between clean energy stocks and precious metals prices under the different market episodes. We employ the Granger causality-in-the distribution test proposed by Candelon and Tokpavi (2016) to investigate the presence of a causality relationship between the variables for the whole distribution because the test has superior power even if the sample size is small. WilderHill Clean Energy Index is considered a benchmark for the clean energy stock market and gold, silver, platinum, and palladium prices are used for the precious metals. By using daily data from January 1, 2001, to December 12, 2021, we find that there is a unidirectional causal link running from the clean energy stock returns to the precious metal prices in the center and the left tail of the distribution. On the other hand, there is strong feedback between the variables in the right tail of the distribution. These results show that clean energy stock prices have an edge in affecting precious metal prices and precious metals cannot be used to hedge the downside risk of clean energy stock investments. •The connectedness between clean energy stocks and precious metals prices under the different market episodes using Granger causality test.•Gold, silver, platinum, and palladium prices are used for the precious metals.•Unidirectional causal link from the clean energy stock index to the precious metal prices in the center and the left tail of the distribution during Jan 01, 2001–Dec 12, 2021.•Feedback between the variables in the right tail of the distribution.•Precious metals cannot be used to hedge the downside risk of clean energy stock investments.