Dynamic :connectedness among global technology-linked financial assets: Portfolio implications

While extensive research exists on financial interlinkages, contagion effects, and diversification across various asset classes, the literature remains limited in examining the dynamic interdependencies among emerging tech-driven financial markets, namely cryptocurrencies, AI and Robotics, and FinTech, especially when considered jointly. Our study fills this gap by analyzing the co-movement and dynamic interdependencies among these assets during periods of turmoil, including the COVID-19 outbreak and the geopolitical instability resulting from the Russia-Ukraine war. Accordingly, it provides valuable empirical evidence on the behavior of tech-based financial markets during extreme market events. The study also explores the implications of co-movement patterns for diversification and risk management within these markets. Using wavelet-based methods, specifically rolling window wavelet correlations and wavelet coherence, the analysis draws on daily data from six global tech-based indices spanning March 1, 2017, to March 23, 2023. The findings reveal generally weak co-movements at short- to medium-term frequencies, while significant interdependencies emerge at longer horizons, particularly during the COVID-19 and Russia-Ukraine crises. In frequency-specific terms, the results show that short- and medium-term investment horizons exhibit limited connectedness, even during major crises such as COVID-19 and the Russia-Ukraine conflict. However, at longer-term horizons, episodes of significant correlation arise, especially during these crisis periods. These findings have important implications for investors and portfolio managers in assessing diversification potential, understanding risk transmission, and informing portfolio risk management decisions. They also provide insights for policymakers and regulators seeking to strengthen financial system resilience.