Illustrates an example of Co-integration
Illustrates an example of Co-integration?
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Assume you have two stocks S1 and S2 and you get that S1 − 3 S2 is stationary; therefore this combination never strays more far from its mean. When one day it ‘spread’ is mainly large then you would have sound statistical reasons for thinking as spread might shortly decrease, giving you a possible source of statistical arbitrage profit. It can be the basis for pairs trading.
How does Jump-Diffusion Model Affect Option Values?
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Explain degree of confidence and the relationship along with deviation.
Illustrates an example of delta hedging.
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Define the term pricing derivatives in Monte Carlo simulations.
What is Black–Scholes equation? Explain.
Explain marked to market by using the implied volatility.
Illustrates the term serial autocorrelation?
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