Case Study: Dependence Among German DAX Stocks

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

Understanding dependence among financial stocks is vital for option pricing and forecasting portfolio returns. Copula modeling has a long history in this area. However, the restrictive use of the multivariate Gaussian copula with no tail dependence has been blamed for the financial crisis in 2007–2008 (see Li 2000, Salmon 2012 and recently Puccetti and Scherer 2018), and therefore it is important to allow for much more flexible dependence models such as allowed by the vine copula class. In this context, the possibility of modeling tail dependence by vine copulas has to be mentioned.

Original languageEnglish
Title of host publicationLecture Notes in Statistics
PublisherSpringer Science and Business Media, LLC
Pages185-201
Number of pages17
DOIs
StatePublished - 2019

Publication series

NameLecture Notes in Statistics
Volume222
ISSN (Print)0930-0325
ISSN (Electronic)2197-7186

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