Revolutionizing Financial Forecasting: New Model Predicts Market Volatility with Precision
A good volatility model needs to predict how prices will change in the future. There are two main types of models used in finance, one based on observable data and the other not. These models must reflect certain patterns seen in financial markets. By studying the Dow Jones Index, researchers found that GARCH-type models can capture these patterns well. Understanding how volatility changes over time is crucial for predicting future prices accurately.