IDEAS home Printed from https://ideas.repec.org/a/sae/emffin/v23y2024i4p495-502.html
   My bibliography  Save this article

A Study on the Hedging and Safe-Haven Features of Non-fungible Tokens Segments

Author

Listed:
  • Emiliya James
  • Parthajit Kayal
  • Moinak Maiti
  • G. Balasubramanian

Abstract

This study examines the hedging and safe-haven characteristics across the various segments of non-fungible tokens (NFTs). It adopts the case study approach to blend the key study findings on the risk and return aspects of different NFT segments. The study finds that various segments of NFTs have mixed levels of correlations with traditional financial assets. Online games and metaverse segments of NFTs display a link to the crypto assets. Similarly, only the metaverse segment shows an association with the market sentiment. Art, online games, and collectibles segments within the NFTs space show mixed levels of hedging. However, all NFT segments under consideration show ambiguous safe-haven facets. Overall, the present study highlights some of the important aspects to consider while investing in the different segments of NFTs with respect to portfolio optimization, market dynamics, and risk management. JEL Codes: C12, C13, J64

Suggested Citation

  • Emiliya James & Parthajit Kayal & Moinak Maiti & G. Balasubramanian, 2024. "A Study on the Hedging and Safe-Haven Features of Non-fungible Tokens Segments," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 23(4), pages 495-502, December.
    • Handle: RePEc:sae:emffin:v:23:y:2024:i:4:p:495-502
    DOI: 10.1177/09726527241257359
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/09726527241257359
    Download Restriction: no
    File URL: https://libkey.io/10.1177/09726527241257359?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Umar, Zaghum & Gubareva, Mariya & Teplova, Tamara & Tran, Dang K., 2022. "Covid-19 impact on NFTs and major asset classes interrelations: Insights from the wavelet coherence analysis," Finance Research Letters, Elsevier, vol. 47(PB).
    2. Boido, Claudio & Aliano, Mauro, 2023. "Digital art and non-fungible-token: Bubble or revolution?," Finance Research Letters, Elsevier, vol. 52(C).
    3. Aysan, Ahmet Faruk & Batten, Jonathan A. & Gozgor, Giray & Khalfaoui, Rabeh & Nanaeva, Zhamal, 2023. "Twitter matters for metaverse stocks amid economic uncertainty," Finance Research Letters, Elsevier, vol. 56(C).
    4. Zhang, Wenting & Liu, Tiantian & Zhang, Yulian & Hamori, Shigeyuki, 2024. "Can NFTs hedge the risk of traditional assets after the COVID-19 pandemic?," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    5. Dowling, Michael, 2022. "Is non-fungible token pricing driven by cryptocurrencies?," Finance Research Letters, Elsevier, vol. 44(C).
    6. Aharon, David Y. & Demir, Ender, 2022. "NFTs and asset class spillovers: Lessons from the period around the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PA).
    7. Dimson, Elroy & Spaenjers, Christophe, 2011. "Ex post: The investment performance of collectible stamps," Journal of Financial Economics, Elsevier, vol. 100(2), pages 443-458, May.
    8. Xia, Yufei & Li, Jinglong & Fu, Yating, 2022. "Are non-fungible tokens (NFTs) different asset classes? Evidence from quantile connectedness approach," Finance Research Letters, Elsevier, vol. 49(C).
    9. Lennart Ante, 2023. "Non-fungible token (NFT) markets on the Ethereum blockchain: temporal development, cointegration and interrelations," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 32(8), pages 1216-1234, November.
    10. Kumar, Anoop S & Padakandla, Steven Raj, 2023. "Do NFTs act as a good hedge and safe haven against Cryptocurrency fluctuations?," Finance Research Letters, Elsevier, vol. 56(C).
    11. Wilson, Kathleen Bridget & Karg, Adam & Ghaderi, Hadi, 2022. "Prospecting non-fungible tokens in the digital economy: Stakeholders and ecosystem, risk and opportunity," Business Horizons, Elsevier, vol. 65(5), pages 657-670.
    12. Umar, Zaghum & Alwahedi, Wafa & Zaremba, Adam & Vo, Xuan Vinh, 2022. "Return and volatility connectedness of the non-fungible tokens segments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 35(C).
    13. Bo, Congcong & Shen, Dehua, 2023. "The road less travelled: GameFi as a hedge or a safe haven for international indices," Finance Research Letters, Elsevier, vol. 57(C).
    14. Wang, Yizhi, 2022. "Volatility spillovers across NFTs news attention and financial markets," International Review of Financial Analysis, Elsevier, vol. 83(C).
    15. BenMabrouk, Houda & Sassi, Syrine & Soltane, Feriel & Abid, Ilyes, 2024. "Connectedness and portfolio hedging between NFTs segments, American stocks and cryptocurrencies Nexus," International Review of Financial Analysis, Elsevier, vol. 91(C).
    16. Wilkoff, Sean & Yildiz, Serhat, 2023. "The behavior and determinants of illiquidity in the non-fungible tokens (NFTs) market," Global Finance Journal, Elsevier, vol. 55(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Proelss, Juliane & Sévigny, Stéphane & Schweizer, Denis, 2023. "GameFi: The perfect symbiosis of blockchain, tokens, DeFi, and NFTs?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    2. Ho, Kin-Hon & Law, Monica & Hou, Yun & Chan, Tse-Tin, 2024. "Spillover analysis on NFTs, NFT-affiliated tokens and NFT submarkets," Finance Research Letters, Elsevier, vol. 60(C).
    3. Zhang, Wenting & Liu, Tiantian & Zhang, Yulian & Hamori, Shigeyuki, 2024. "Can NFTs hedge the risk of traditional assets after the COVID-19 pandemic?," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    4. Díaz, Antonio & Esparcia, Carlos & Huélamo, Diego, 2023. "Unveiling the diversification capabilities of carbon markets in NFT portfolios," Finance Research Letters, Elsevier, vol. 58(PD).
    5. Choi, Jaeseo, 2024. "A Study on the Applicability of NFT in the Entertainment Industry: Application of the Means-end Chain analysis and Laddering," 24th ITS Biennial Conference, Seoul 2024. New bottles for new wine: digital transformation demands new policies and strategies 302456, International Telecommunications Society (ITS).
    6. Aysan, Ahmet Faruk & Batten, Jonathan & Gozgor, Giray & Khalfaoui, Rabeh & Nanaeva, Zhamal, 2024. "Metaverse and financial markets: A quantile-time-frequency connectedness analysis," Research in International Business and Finance, Elsevier, vol. 72(PB).
    7. Ali, Shoaib & Al-Nassar, Nassar S. & Naveed, Muhammad, 2024. "Bridging the gap: Uncovering static and dynamic relationships between digital assets and BRICS equity markets," Global Finance Journal, Elsevier, vol. 60(C).
    8. Goodell, John W. & Yadav, Miklesh Prasad & Ruan, Junhu & Abedin, Mohammad Zoynul & Malhotra, Nidhi, 2023. "Traditional assets, digital assets and renewable energy: Investigating connectedness during COVID-19 and the Russia-Ukraine war," Finance Research Letters, Elsevier, vol. 58(PA).
    9. Ghosh, Bikramaditya & Bouri, Elie & Wee, Jung Bum & Zulfiqar, Noshaba, 2023. "Return and volatility properties: Stylized facts from the universe of cryptocurrencies and NFTs," Research in International Business and Finance, Elsevier, vol. 65(C).
    10. Ali, Shoaib & Umar, Muhammad & Gubareva, Mariya & Vo, Xuan Vinh, 2024. "Extreme connectedness between NFTs and US equity market: A sectoral analysis," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 299-315.
    11. BenMabrouk, Houda & Sassi, Syrine & Soltane, Feriel & Abid, Ilyes, 2024. "Connectedness and portfolio hedging between NFTs segments, American stocks and cryptocurrencies Nexus," International Review of Financial Analysis, Elsevier, vol. 91(C).
    12. Abdullah, Mohammad & Sarker, Provash Kumer & Abakah, Emmanuel Joel Aikins & Tiwari, Aviral Kumar & Rehman, Mohd Ziaur, 2024. "Tail risk intersection between tech-tokens and tech-stocks," Global Finance Journal, Elsevier, vol. 61(C).
    13. Gunay, Samet & Goodell, John W. & Muhammed, Shahnawaz & Kirimhan, Destan, 2023. "Frequency connectedness between FinTech, NFT and DeFi: Considering linkages to investor sentiment," International Review of Financial Analysis, Elsevier, vol. 90(C).
    14. Abakah, Emmanuel Joel Aikins & Wali Ullah, G M & Abdullah, Mohammad & Lee, Chi-Chuan & Sulong, Zunaidah, 2024. "Correlation structure between fiat currencies and blockchain assets," Finance Research Letters, Elsevier, vol. 62(PA).
    15. Wang, Jying-Nan & Lee, Yen-Hsien & Liu, Hung-Chun & Hsu, Yuan-Teng, 2023. "Dissecting returns of non-fungible tokens (NFTs): Evidence from CryptoPunks," The North American Journal of Economics and Finance, Elsevier, vol. 65(C).
    16. Theodore Panagiotidis & Georgios Papapanagiotou, 2024. "A note on the determinants of NFTs returns," Working Paper series 24-07, Rimini Centre for Economic Analysis.
    17. Umar, Zaghum & Polat, Onur & Choi, Sun-Yong & Teplova, Tamara, 2022. "Dynamic connectedness between non-fungible tokens, decentralized finance, and conventional financial assets in a time-frequency framework," Pacific-Basin Finance Journal, Elsevier, vol. 76(C).
    18. Yousaf, Imran & Assaf, Ata & Demir, Ender, 2024. "Relationship between real estate tokens and other asset classes: Evidence from quantile connectedness approach," Research in International Business and Finance, Elsevier, vol. 69(C).
    19. Elie Bouri & Matteo Foglia & Sayar Karmakar & Rangan Gupta, 2024. "Return-Volatility Nexus in the Digital Asset Class: A Dynamic Multilayer Connectedness Analysis," Working Papers 202432, University of Pretoria, Department of Economics.
    20. Menvouta, Emmanuel Jordy & Serneels, Sven & Verdonck, Tim, 2023. "Practicable optimization for portfolios that contain nonfungible tokens," Finance Research Letters, Elsevier, vol. 55(PB).

    More about this item

    Keywords

    NFT; alternative investment; portfolio diversification; hedge; metaverse;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:emffin:v:23:y:2024:i:4:p:495-502. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ifmr.ac.in .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.