This study aims to investigate the convergence dynamics among Islamic indices, global ESG benchmarks and eco-friendly/Islamic cryptocurrencies, focusing on their stabilizing, bridging and diversification roles in sustainable investment.
Using daily data from April 2021 to March 2025, this study uses wavelet-based methods. The analysis covers Islamic indices (Dow jones Islamic market world index and Dow Jones Islamic Market Sustainability Index), ESG benchmarks (S&P500 Scored & Screened and Dow Jones Best-in-Class) and cryptocurrencies [Cardano (ADA) and X8X], capturing time-frequency, scale-dependent and crisis-contingent co-movements.
Results show strong and persistent convergence between Islamic and ESG indices across all horizons, indicating that they function as an integrated block of ethical finance rather than independent diversifiers. By contrast, cryptocurrencies display weak and episodic linkages: ADA exhibits medium-term co-movements during 2022–2023, whereas X8X shows negligible integration, reflecting immaturity and volatility. Robustness checks confirm Islamic-ESG convergence as structural, while Islamic-crypto linkages remain conditional and less reliable during crises.
Investors should treat Islamic-ESG assets as a stable portfolio core for long-term resilience, while using cryptocurrencies such as ADA only for short-term diversification and avoiding immature assets such as X8X.
To the best of the authors’ knowledge, this is the first attempt to place Islamic indices at the core and assess their convergence with ESG indices and Islamic/green cryptocurrencies using a comprehensive wavelet framework, offering novel evidence of the stabilizing and bridging role of Islamic green finance in global sustainable investment.
