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Nonlinear and asymmetric interconnectedness of crude oil with financial and commodity markets
Univ Augsburg, Germany.
Linköping University, Department of Management and Engineering, Economics. Linköping University, Faculty of Arts and Sciences.
Norwegian Univ Life Sci, Norway.
2023 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 125, article id 106853Article in journal (Refereed) Published
Abstract [en]

In light of the COVID-19 outbreak and the recent Russian war in Ukraine, this paper explores the asymmetric and nonlinear interconnectedness between financial and commodity markets using high-frequency intraday data. We employ cross-quantilograms (CQ), paired vine-based copulas, and copula vine-based regression analysis to examine the heterogeneous and asymmetrical connectedness among various assets. Our study presents several key findings: (1) connectedness among assets increases sharply during the COVID-19 pandemic and intensifies with the Russia-Ukraine war; (2) stronger tail dependence is observed in the lower tail, indicating asymmetric connectedness among the assets; (3) the S & P 500 and natural gas have a predictive influence on the crude oil market; and (4) increased uncertainty and volatility in global markets due to these events impact the interconnectedness of the assets in our study, particularly the dependence between crude oil and the other assets in the sample. These results have important implications for governmental agencies, policymakers, investors, and portfolio managers, emphasizing the need for a non-linear framework to capture heterogeneous and asymmetric connectedness dynamics under extreme market conditions.

Place, publisher, year, edition, pages
ELSEVIER , 2023. Vol. 125, article id 106853
Keywords [en]
Crude oil; Vine copula; COVID-19; Russia-Ukraine; Complex dependence
National Category
Economics
Identifiers
URN: urn:nbn:se:liu:diva-197865DOI: 10.1016/j.eneco.2023.106853ISI: 001055002000001OAI: oai:DiVA.org:liu-197865DiVA, id: diva2:1798206
Available from: 2023-09-18 Created: 2023-09-18 Last updated: 2023-09-18

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Uddin, Gazi Salah
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CiteExportLink to record
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Citation style
  • apa
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  • oxford
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  • de-DE
  • en-GB
  • en-US
  • fi-FI
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  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf