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Characterizing Correlation Matrices that Admit a Clustered Factor Representation

Chen Tong, Peter Reinhard Hansen

arXiv 11 Aug 2023 · Econometrics · publishedEconomics Letters (2023) · 3 citations (OpenAlex)

arXiv:2308.05895 · PDF · DOI · OpenAlex · Extracted main text

Abstract

The Clustered Factor (CF) model induces a block structure on the correlation matrix and is commonly used to parameterize correlation matrices. Our results reveal that the CF model imposes superfluous restrictions on the correlation matrix. This can be avoided by a different parametrization, involving the logarithmic transformation of the block correlation matrix.

Citation extraction

17
references
23
in-text mentions
17
distinct cited
4
self-citations
3,105
main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Archakov, I. and Hansen, P. R (2023) A canonical representation of block matrices with applications to covariance and correlation matrices self1.00063100%
2Archakov, I. and Hansen, P. R (2021) A new parametrization of correlation matrices self0.64422100%
3Archakov, I., Hansen, P. R., and Lunde, A (2020) A multivariate Realized GARCH model self0.40511100%
4Creal, D. and Kim, J (2022) Bayesian estimation of block covariance matrices0.40511100%
5Creal, D. and Tsay, R. S (2015) High dimensional dynamic stochastic copula models0.40511100%
6Hansen, P. R., Lunde, A., and Nason, J. M (2011) The model confidence set self0.40511100%
7Johansen, S (1988) Statistical analysis of cointegration vectors0.40511100%
8Johansen, S (1991) Estimation and hypothesis testing of cointegration vectors in gaussian vector autoregressive models0.40511100%
9Krupskii, P. and Joe, H (2013) Factor copula models for multivariate data0.40511100%
10Krupskii, P. and Joe, H (2015) Structured factor copula models: Theory, inference and computation0.40511100%

Showing the top 10 of 17 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Cluster GARCH0.40511
2Dynamic Factor Correlation Model0.40511
3Split-Session Cluster GARCH for Overnight and Intraday Returns: The Role of Tail Heterogeneity0.40511