Network Models in Finance

Expansive overview of theory and practical implementation of networks in investment management

Guided by graph theory, Network Models in Finance: Expanding the Tools for Portfolio and Risk Management provides a comprehensive overview of networks in investment management. It delivers strong knowledge of various types of networks, important characteristics, estimation, and their implementation in portfolio and risk management.

With insights into the complexities of financial markets regarding how individual entities interact within the financial system, this book enables readers to construct diversified portfolios by understanding the link between price/return movements of different asset classes and factors. It aids in performing better risk management by providing understanding of systematic, systemic risk and counterparty risk, and helps in monitoring changes in the financial system that indicate a potential financial crisis.

With a practitioner-oriented approach, this book includes coverage of:

• Practical examples of broad financial data to show the vast possibilities to visualize, describe, and investigate markets in a completely new way
• Interactions, causal relationships, and optimisation within a network-based framework and direct applications of networks compared to traditional methods in finance
• Various types of algorithms enhanced by programming language codes that readers can implement and use for their own data

Network Models in Finance: Expanding the Tools for Portfolio and Risk Management is an essential read for asset managers and investors seeking to make use of networks in research, trading, and portfolio management.