Stochastic modeling

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Stochastic Modeling

Any of several methods for measuring the probability of distribution of a random variable. That is, a stochastic model measures the likelihood that a variable will equal any of a universe of amounts. It is used in technical analysis to predict market movements. Insurance companies also use stochastic modeling to estimate their assets and liabilities because, due to the nature of the insurance business, these are not known quantities.

Stochastic modeling.

Stochastic modeling is a statistical process that uses probability and random variables to predict a range of probable investment performances.

The mathematical principles behind stochastic modeling are complex, so it's not something you can do on your own.

But based on information you provide about your age, investments, and risk tolerance, financial analysts may use stochastic modeling to help you evaluate the probability that your current investment portfolio will allow you to meet your financial goals.

Appropriately enough, the term stochastic comes from the Greek word meaning "skillful in aiming."

References in periodicals archive ?
For the stochastic model, the yield curve P(0,t) for t = 1, .
A stochastic model is proposed to represent F(t) oscillations.
In performing a pension valuation, an appropriate stochastic model needs to be constructed to appropriately express the turnover pattern according to the current active workforce and project the corresponding future cash flows.
Several authors, including myself, have shown that when studying cancer, using a deterministic model rather than a stochastic model for tumor incidence can lead to different results.
Current recommendations propose standards that account for a linear conservative risk without threshold value, together with a stochastic model computed on a quadratic basis using the dose/dose-rate effectiveness factor relationship (DDREF) = 2 below 0.
8) It might also be noted that this assumption is very common in the finance, economics and insurance literature, because it is natural to attempt to use past data to fit unknown parameters in a stochastic model.
The stochastic model makes use of mathematical and statistical methods to 'learn' factors and exposures that evolve with the market.
The distributions can be used to generate the behavior of a stochastic model over time, so that quantities of interest can be estimated.
Examples of specific topics include a stochastic model for video and its information rates, spatial sparsity induced temporal prediction for hybrid video compression, differential compression of executable code, parallel decoding for lossless image compression by block matching, high throughput compression of double- precision floating-point data, and Bayesian detection in bounded height tree networks.
The researchers create stochastic models to analyze viral dynamics and to understand how protective or preventative drug treatment prior to or immediately following exposure can act to reduce risk of infection under various scenarios.
Factor-based models take a quantitative, formulaic approach to determining capital adequacy, while stochastic models are more probabilistic.

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