Constructing Climate Hedge Portfolios

Constructing Climate Hedge Portfolios

In this video collaboration with MMF, Nobel Laureate and economist Robert Engle outlines how to construct a climate hedge portfolio using two strategies and explores why it's not that easy to hedge physical risks.
Overview

Robert Engle shows us numerous strategies for constructing a climate hedge portfolio and their respective benefits. Robert then explores why it’s hard to hedge physical risks, the part of climate change most people worry about, and why the demand for oil and coal is going up.

Key learning objectives:

  • Learn how to construct climate hedge portfolios

  • Define the characteristics of a stranded asset portfolio and a factor mimicking portfolio

  • Understand why fossil fuel energy stocks are rising

  • Define why it’s difficult to hedge physical risks

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Summary
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Expert
Robert Engle

Robert Engle

Robert Engle is a co-director of the Volatility and Risk Institute. He was awarded the 2003 Nobel Prize in Economic Sciences for his work on autoregressive conditional heteroskedasticity. He holds a Ph.D. in economics from Cornell University in New York, United States.

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