Dynamic spillover effect among carbon finance, bitcoin, and green energy markets: a novel decomposed connectedness and portfolio analysis

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Cifuentes-Faura J., Alofaysan H., RADULESKU M., DOĞAN B.

Financial Innovation, vol.12, no.1, 2026 (SSCI, Scopus) identifier identifier

  • Publication Type: Article / Article
  • Volume: 12 Issue: 1
  • Publication Date: 2026
  • Doi Number: 10.1186/s40854-026-00922-z
  • Journal Name: Financial Innovation
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, ABI/INFORM, Directory of Open Access Journals
  • Keywords: Artificial intelligence, Carbon finance, Innovative connectedness, Technology markets
  • Open Archive Collection: Digital Heritage Collection
  • Azerbaijan State University of Economics (UNEC) Affiliated: Yes

Abstract

This study employs novel decomposed connectedness and portfolio analysis to assess the dynamic spillover effects among carbon finance, artificial intelligence, green energy markets, and bitcoin. The findings indicate that the average total connectedness index is 62%, especially during extreme market conditions. The decomposition of this measure into contemporaneous and lagged connectedness reveals that 56% of the metric can be attributed to contemporaneous dynamics. The portfolio exhibits high Hedging Effectiveness, particularly in extreme market conditions, suggesting that green assets can mitigate risks during periods of financial and geopolitical turmoil. The outcome shows that investments in Bitcoin and technology-related assets often yield the highest returns from 2018 to 2023. Based on the findings, relevant investment policies have been suggested for investors and policy decision-makers.