Quantcast
Channel: MoneyScience: 's news items
Viewing all articles
Browse latest Browse all 1821

From microscopic price dynamics to multidimensional rough volatility models. (arXiv:1910.13338v1 [q-fin.MF])

$
0
0

Rough volatility is a well-established statistical stylised fact of financial assets. This property has lead to the design and analysis of various new rough stochastic volatility models. However, most of these developments have been carried out in the mono-asset case. In this work, we show that some specific multivariate rough volatility models arise naturally from microstructural properties of the joint dynamics of asset prices. To do so, we use Hawkes processes to build microscopic models that reproduce accurately high frequency cross-asset interactions and investigate their long term scaling limits. We emphasize the relevance of our approach by providing insights on the role of microscopic features such as momentum and mean-reversion on the multidimensional price formation process. We in particular recover classical properties of high-dimensional stock correlation matrices.


Viewing all articles
Browse latest Browse all 1821

Trending Articles