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Keywords:

  • stable distribution;
  • heavy-tailed models;
  • financial mathematics;
  • robust methods

The aim of this article was to give an accessible introduction to stable distributions for financial modeling. There is a real need to use better models for financial returns because the normal (or bell curve/Gaussian) model does not capture the large fluctuations seen in real assets. Stable laws are a class of heavy-tailed probability distributions that can model large fluctuations and allow more general dependence structures. WIREs Comput Stat 2014, 6:45–55. doi: 10.1002/wics.1286

Conflict of interest: The authors have declared no conflicts of interest for this article.

For further resources related to this article, please visit the WIREs website.