Systemic Tail Dependence Between Biodiversity, Clean Energy, and Financial Transition Assets: A Partial Correlation-Based Network Approach
This study investigates the systemic tail dependence among biodiversity, clean energy, and financial transition assets using a novel partial correlation-based network approach. Analyzing eleven indices from 2019 to 2025, we capture dynamic connectedness across normal and extreme market conditions. Empirical findings indicate that clean energy assets form a central hub of connectedness, while biodiversity-linked instruments increasingly influence systemic behavior under stress. Events such as the COVID-19 vaccine rollout, the Russia–Ukraine war, and El Niño intensify these dynamics. Compared to the traditional Generalized Forecast Error Variance Decomposition (GFEVD) framework, our approach better detects short-term shocks, offering actionable insights for climate-aware investment and risk management.
Authors
- Mohammed Alhashim
- Nader Naifar (ORCID: https://orcid.org/0000-0001-9554-8236)
Institutions
- Imam Mohammad ibn Saud Islamic University (SA)
- King Saud University (SA)
Publication Details
- Journal
- Sustainability
- Published
- 2025-07-18
- DOI
- https://doi.org/10.3390/su17146568
- Primary Topic
- Market Dynamics and Volatility
- Type
- article
- Field-Weighted Citation Impact
- 0.00
Funders
- Imam Mohammed Ibn Saud Islamic University
- Al-Imam Muhammad Ibn Saud Islamic University