Nobel Prize winning economist
In this video collaboration with MMF, Nobel Laureate and economist Robert Engle explores the asset pricing theory behind hedge portfolios, as well as how you would build a portfolio using either fundamental or statistical analysis.
In this video collaboration with MMF, Nobel Laureate and economist Robert Engle explores the asset pricing theory behind hedge portfolios, as well as how you would build a portfolio using either fundamental or statistical analysis.
6 mins 14 secs
Robert Engle argues that risky stocks are less desirable than stocks which are minimally risky. Stocks that are exposed to climate risk are not desirable but could expect to have higher expected returns and a hedge investor will want to short this risk. To build a hedge portfolio, fundamental analysis can be undertaken based on how climate change is going to impact industries or statistical analysis which recognises how stocks will react based on climate change news.
Key learning objectives:
Learn what a climate hedge portfolio is
Understand two analytic approaches to building a climate hedge portfolio