Are energy metals hedges or safe havens for clean energy stock returns?

Highlights: • We investigate if energy metals can hedge clean energy equity risk. • None of the energy metals acts as a hedge. • Gold and silver act as hedges for certain clean energy stocks. This paper examines the relationship between clean energy stock indices and energy metals that are sensitive to the growth in demand for clean energy solutions, and makes inferences about whether energy metals can act as hedges or safe havens for clean energy stock indices. The sample period is April 2011 to April 2021, a period which saw substantial investments into the clean energy industry as the capital deployed to clean energy generation during this period was about three times higher than the preceding decade. The main results indicate statistically significant non-linear relationships among the markets under study. All energy metals, except cobalt, have a significant positive linkage with clean energy stock indices and such associations do hold during episodes of high volatility. While none of the energy metals under study acts as a hedge for clean energy stock markets, the results support previous evidence on the hedging properties of precious metals, showing that gold and silver serve as hedges for certain clean energy stock indices. These results have important implications amid tremendous growth in clean energy stock investments and the repeating occurrence of periods of uncertainty.