Mathematical and Statistical Approaches
Because of their backgrounds, quantitative analysts draw from three forms of mathematics: statistics and probability, calculus centered around partial differential equations, and econometrics. The majority of quantitative analysts have received little formal education in mainstream economics, and often apply a mindset drawn from the physical sciences. Physicists tend to have significantly less experience of statistical techniques, and thus lean on approaches based upon partial differential equations, and solutions to these based upon numerical analysis.
The most commonly used numerical methods are:
- Finite difference method – used to solve partial differential equations;
- Monte Carlo method – Also used to solve partial differential equations, but Monte Carlo simulation is also common in risk management.
Read more about this topic: Quantitative Analyst
Famous quotes containing the words mathematical and/or approaches:
“It is by a mathematical point only that we are wise, as the sailor or the fugitive slave keeps the polestar in his eye; but that is sufficient guidance for all our life. We may not arrive at our port within a calculable period, but we would preserve the true course.”
—Henry David Thoreau (1817–1862)
“The Oriental philosophy approaches easily loftier themes than the modern aspires to; and no wonder if it sometimes prattle about them. It only assigns their due rank respectively to Action and Contemplation, or rather does full justice to the latter. Western philosophers have not conceived of the significance of Contemplation in their sense.”
—Henry David Thoreau (1817–1862)