THE RELATIONSHIP OF ALTERNATIVE ENERGY STOCKS WITH OIL COMPANY AND NATURAL GAS COMPANY STOCKS

摘要

The results of this study show that alternative energy company stock prices are highly correlated with oil and natural gas company stock prices. We further found that technology company stock prices are highly correlated with alternative energy company stock prices. This corroborates the findings of Henriques and Sadorsky (2008) and Sadorsky (2011). The correlations with technology companies were the highest among the three stock indices investigated and suggest that alternative energy companies have more similarity with technology equities than equities in the oil and natural gas industries. Our findings also show a weakening relationship of alternative energy company stocks with the commodities of oil and natural gas over the study period. While the correlations were strong in the first two years of the study period, the prices were uncorrelated in the last two years. Given the mixed findings of previous studies and the findings of this study, the relationship of alternative energy company stock prices and the prices of crude oil and natural gas seem to be dependent on the time period investigated. Another important finding is that the relationship between natural gas and crude oil was significant in the first two years of the study but weakened slightly in the middle two years. This was followed by a complete decoupling during the last two years of the study period. It will be interesting to follow up this study at a later point to see if the decoupling is temporary or if it continues.