Hedging dynamics between oil and clean energy stock indices amid the Russia-Ukraine war and geopolitical turmoil

• 
  By Sajal Ghosh
  Professor

  Co-Authors
  Kakali Kanjilal, IMI Delhi
  Manas Paul, Institute Of Management Technology Ghaziabad
  Sajal Ghosh, Management Development Institute
  

  Journal : Finance Research Letters
  Publisher : Elsevier

Article citation: Kanjilal, K., Paul, M., & Ghosh, S. (2025). Hedging dynamics between oil and clean energy stock indices amid the Russia–Ukraine war and geopolitical turmoil. Finance Research Letters, 84, 107753.

Abstract

Geopolitical turmoil, such as the Russia-Ukraine war, compels a renewed examination of the interaction and hedging effectiveness between clean and dirty energy assets. While prior studies focus on crude oil prices, we employ oil and clean energy indexes from 24.02.2022 to 07.06.2024, in a novel integrated mean-variance model. Accounting for geopolitical risks, investor fear, and carbon prices, we find oil price surges reduce clean energy returns, with no feedback. The model delivers 70 % hedging effectiveness versus 49 % for the variance-only approach. Findings highlight the reinforcement of oil’s financial role and the weakening of clean energy investment amid global instability.