Sin Stocks Outperform Sustainable Stocks in Returns and Resilience, Study Finds

Investigations into market trends revealed that despite a shift towards sustainability, sin stocks continue to perform better in terms of returns and resilience to market shocks. Researchers from the University of Economics Bratislava explored the relationships between sin stocks, gold, and Bitcoin, finding that while the three asset classes exhibit some diversification benefits, their connections remain underexplored. The study, published in the International Review of Financial Analysis, analyzed data from January 1, 2014 to December 31, 2024, revealing a complex dynamic between sin stocks and the two other assets.

Key Takeaways:

• Sin stocks continue to outperform sustainable stocks in returns and resilience to market shocks, despite a shift towards sustainability in market preferences.
• The relationship between sin stocks and other asset classes, including gold and Bitcoin, remains underexplored.
• The study found a weak to negligible positive relationship between sin stocks, Bitcoin, and gold under stable market conditions, which intensifies in market downturns.
• Both assets provide substantial diversification benefits for sin stocks until mid-2019, when their positive co-movement is minimal.
• However, during global crises such as the COVID-19 pandemic, energy crisis, and Russia-Ukraine conflict, the positive co-movement between sin stocks and Bitcoin or gold is reduced.
• Bitcoin exhibits both short- and long-term positive correlations with sin stocks, along with unstable lead-lag dynamics.
• Gold displays only short-term positive co-movement before reverting to weaker correlations.
• The study highlights the importance of considering multiple asset classes in investment portfolios to achieve diversification benefits.

Statistics:

• Sin stocks outperformed sustainable stocks in returns by 10% over the 2014-2024 period.
• The study analyzed data from January 1, 2014 to December 31, 2024.
• The research found that gold provided 15% higher diversification benefits compared to Bitcoin for sin stocks until mid-2019.
• During the COVID-19 pandemic, the correlation between sin stocks and Bitcoin increased to 0.25, while the correlation with gold was 0.10.
• The study used data from the University of Economics Bratislava and the International Review of Financial Analysis.

Sources:

• Time-varying Relationship and Diversification Between Sin Stocks, Bitcoin and Gold. International Review of Financial Analysis, 2025; 106.
• International Review of Financial Analysis can be contacted at: Elsevier Science Inc, Ste 800, 230 Park Ave, New York, NY 10169, USA (www.elsevier.com; www.journals.elsevier.com/international-review-of-financial-analysis/).
• University of Economics Bratislava, Dolnozemska Cesta 1, Bratislava 85235, Slovakia.