Advances in Economics, Management and Political Sciences

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Proceedings of the 2nd International Conference on Financial Technology and Business Analysis

Series Vol. 49 , 01 December 2023


Open Access | Article

Time Series Analysis of Climate Change & Its Relationship with Stock Price

Jiayi Xiao * 1
1 Nottingham University Business School, University of Nottingham Ningbo China, TaiKang East Road, Ningbo, China

* Author to whom correspondence should be addressed.

Advances in Economics, Management and Political Sciences, Vol. 49, 45-57
Published 01 December 2023. © 2023 The Author(s). Published by EWA Publishing
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Citation Jiayi Xiao. Time Series Analysis of Climate Change & Its Relationship with Stock Price. AEMPS (2023) Vol. 49: 45-57. DOI: 10.54254/2754-1169/49/20230483.

Abstract

Climate change has recently become a critical global concern, and its potential impact on financial markets has attracted significant attention. The study investigates the relationship between rising temperatures and the S&P 500 index, aiming to understand the implications of temperature changes on stock market performance. This research applies the Autoregressive Integrated Moving Average (ARIMA) model to analyze the relationship, using the linear and dynamic regression models to forecast the S&P 500 according to the ARIMA-fitted values of temperature change in the future. The findings from the dynamic regression model indicate that the rising temperature positively impacts the S&P 500, while the linear regression models show no correlation between these two. The study's findings support investors and policymakers in gaining a more comprehensive insight into the relationship and applying it to business practices. Furthermore, the study offers guidance to develop risk mitigation strategies within the financial sector.

Keywords

stock market, climate change, global warming, S&P 500, ARIMA

References

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2. Kelp, Makoto M., Andrew P . Grieshop, Conor CO Reynolds, Jill Baumgartner, Grishma Jain, Karthik Sethuraman, and Julian D. Marshall. (2018). Real-time indoor measurement of health and climate-relevant air pollution concentrations during a carbon-finance-approved cookstove intervention in rural India. Development Engineering 3: 125–32.

3. Fang, Zheng, Jianying Xie, Ruiming Peng, and Sheng Wang. (2021). Climate Finance: Mapping Air Pollution and Finance Market in Time Series. Econometrics 9: 43. https://doi.org/10.3390/econometrics9040043. last accessed 2023/7/05.

4. Bee-Hoong Tay. (2023). Climate change and stock market: a review. IOP Conf. Ser.: Earth Environ. Sci. 1151 012021. last accessed 2023/7/07.

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7. Kollias, C., Papadamou, S., 2016. Environmentally responsible and conventional market indices’ reaction to natural and anthropogenic adversity: a comparative analysis. J. Bus. Ethics 138 (3), 493–505.

8. “Global Time Series | Climate at a Glance | National Centers for Environmental Information (NCEI).” www.ncei.noaa.gov/access/monitoring/climate-at-a-glance/global/time series/northAmerica/land/all/1/1850-2023. last accessed 2023/7/01.

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10. “S&P 500.” Fred.stlouisfed.org, 20 Apr. 2020, fred.stlouisfed.org/series/SP500. https://fred.stlouisfed.org/series/SP500. last accessed 2023/7/01.

11. Bolton, P., & Kacperczyk, M. T. (2019). Do Investors Care about Carbon Risk? SSRN Electronic Journal, 142(2).

Data Availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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Volume Title
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
ISBN (Print)
978-1-83558-145-2
ISBN (Online)
978-1-83558-146-9
Published Date
01 December 2023
Series
Advances in Economics, Management and Political Sciences
ISSN (Print)
2754-1169
ISSN (Online)
2754-1177
DOI
10.54254/2754-1169/49/20230483
Copyright
© 2023 The Author(s)
Open Access
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Copyright © 2023 EWA Publishing. Unless Otherwise Stated