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On the Realized Joint Laplace Transform of Volatilities with Application to Test the Volatility Dependence

XinWei Feng, Yu Jiang, Zhi Liu, Zhe Meng

arXiv 4 Mar 2025 · Mathematics — Statistics Theory

arXiv:2503.02283 · PDF · Extracted main text

Abstract

In this paper, we first investigate the estimation of the empirical joint Laplace transform of volatilities of two semi-martingales within a fixed time interval [0, T] by using overlapped increments of high-frequency data. The proposed estimator is robust to the presence of finite variation jumps in price processes. The related functional central limit theorem for the proposed estimator has been established. Compared with the estimator with non-overlapped increments, the estimator with overlapped increments improves the asymptotic estimation efficiency. Moreover, we study the asymptotic theory of estimator under a long-span setting and employ it to create a feasible test for the dependence between volatilities. Finally, simulation and empirical studies demonstrate the performance of proposed estimators.

Citation extraction

38
references
51
in-text mentions
38
distinct cited
2
self-citations
8,766
main-text words

appendix boundary found by appendix_titled_section at “Appendix: proofs” · 48% of the source is main text. Read the extracted text to check this.

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
1Viktor Todorov and George Tauchen (2012) The realized Laplace transform of volatility0.8435460%
2Steven L Heston (1993) A closed-form solution for options with stochastic volatility with applications to bond and currency options0.64422100%
3Torben G Andersen, Tim Bollerslev, Francis X Diebold, and Paul Labys (2001) The distribution of realized exchange rate volatility0.58531100%
4Jean Jacod and Philip Protter (2012) Discretization of processes0.5112250%
5Ole E Barndorff-Nielsen and Neil Shephard (2002) Econometric analysis of realized volatility and its use in estimating stochastic volatility models0.51121100%
6Jean Jacod (2008) Asymptotic properties of realized power variations and related functionals of semimartingales0.51121100%
7Dominique De Hay (2005) On invariant distribution function estimation for continuous-time stationary processes0.40511100%
8Cecilia Mancini. Non‐parametric threshold estimation for models with… (2009) Scandinavian Journal of Statistics 360 (2): :0 270–296, 20090.40511100%
9Yacine Aẗ-Sahalia, Jianqing Fan, and Dacheng Xiu (2010) High-frequency covariance estimates with noisy and asynchronous financial data0.40511100%
10Yacine Aẗ-Sahalia and Jean Jacod (2014) High-frequency financial econometrics0.40511100%

Showing the top 10 of 38 scored citations.