What is the Green index?
The Green index is a unique market designed to measure the stock performance of the top 30 North American publicly listed companies investing in alternative energy sources.
Constituents are ranked and weighted according to their market capitalisation, and the index is revised quarterly on the third Friday of every March, June, September and December after market close.
Why trade the Green index?
Green energy has been of growing global importance for many decades now, though the pace of movement can be slow and unpredictable.
Global energy demand is forever on the rise, as more and more administrations commit to net-zero targets. Plus, energy industry stakeholders are investing in next-generation technologies such as green hydrogen, advanced batteries and other forms of long-duration storage.
However, the majority of green companies rely heavily on government subsidies, and these injections of capital are volatile – they can suffer as governments grapple with economic slowdowns, and when the cost of conventional energy sources, like oil and natural gas, stays low.
The performance of green stocks
Green stocks have seen significant volatility in recent years thanks to fluctuating demand between renewable and ‘dirty’ energy.
The outlook today is mixed, with some analysts suggesting portfolios should have some long-term exposure to green stocks and others feeling investors are still paying too much to buy stakes in these enterprises.
As ever, traders need to stay up to date with the latest news and discourse, and our own market analysis pages can provide important information to help you make educated choices regarding market direction.
How to trade the Green index
The 30 different companies listed in the Green index all trade on North American stock exchanges. The biggest ones command around 10% of the total index with the smallest around 1%.
You can go long on or short (buy or sell) the Green index based on your judgement of the market on technical data, fundamental analysis, or as a reaction to news events.
As with all the other trading instruments available at City Index, our charts depicting the Green index are easily accessibly on any device, and come with technical indicators and drawing tools as standard.
What's the difference between the Green index and the ESG index?
Whilst there is much environmental crossover between green and ESG-focused companies, the main difference between them is that companies with a green focus have an interest in climate-friendly alternative-energy sources and other environmental efforts as their prime feature.
Meanwhile, the ESG index focuses on companies that drill down into other human aspects as well: including social policies, diversity, and workers' treatment.