Dynamic connectedness and hedging capabilities across energy and carbon markets, fintech, critical mining, and rare earth elements. Evidence from quantile time-frequency and investment strategies

The present research investigates the interconnectivity and volatility spillover phenomena among clean energy stocks, green bonds, oil, natural gas, coal, heating, and energy stocks, carbon pricing, financial technology, the rare earth sector, and critical mining, employing daily data. The findings derived from the time-frequency quantile connectedness methodology indicate that overall connectedness escalates during periods of extreme market conditions, revealing that the rare earth sector, the carbon market, and natural gas function as net receivers’ shocks, while fintech, coal, and conventional energy stocks operate as net transmitters of volatility across all evaluated periods. Additionally, we observed dynamic role shifts contingent upon the prevailing market conditions analyzed for the remaining financial assets. Furthermore, fintech and critical mining enterprises exert the most significant influence on clean energy stocks and green bonds, respectively, which can be ascribed to the pivotal roles that fintech and critical mining play in the realm of renewable energy. The findings further indicate that short-term frequency connectedness surpasses medium- and long-term frequencies during extreme and normal periods, underscoring the variability of investment horizons in response to economic and financial events. In terms of the optimal hedge ratio and portfolio weights, the results suggest that green bonds possess considerable hedging capabilities for natural gas, coal, and heating oil. In contrast, heating oil emerges as the most economically advantageous position for critical mining, rare earth, carbon pricing, and energy stocks. The implications of the study’s results bear significant relevance for policymakers and investors alike.