Saturday, January 29, 2011

Modeling equity prices moves with tips from Paul Wilmott

In Paul's book, Paul Wilmott introduces Quantitative Finance, he has a section on Stochastic calculus and how stock price charts can be modeled or approximated by using tools like Brownian motion with drift and lognormal random walks.  Don't worry about the math too much though.  His book comes with a CD-ROM that includes some spreadsheets that allow you to tweak the parameters of these tools to do your own approximations.  Check out my approximations for Apple below.  I have to admit this is going to take some practice for me to thoroughly understand this.  Cheers.


Disclaimer: Please only use this information with a grain of salt and at your own risk / for educational purposes. I am not an investment advisor so please seek professional help if that's what you're looking for.
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