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arxiv: 1508.05241 · v3 · pith:FQLGYKVQnew · submitted 2015-08-21 · 💱 q-fin.TR · q-fin.PM

Volatility Harvesting: Extracting Return from Randomness

classification 💱 q-fin.TR q-fin.PM
keywords returnvolatilitybinomialconfirmcreatedatadiscretedynamics
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Studying Binomial and Gaussian return dynamics in discrete time, we show how excess volatility can be traded to create growth. We test our results on real world data to confirm the observed model phenomena while also highlighting implicit risks.

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