What are statistical or macroeconomic factors
What are statistical or macroeconomic factors?
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In practice we can select the factors to be statistical or macroeconomic. Here are several possible macroeconomic variables as follows:• An index level• GDP development• An interest rate or may two• A default spread upon corporate bonds• An exchange rate.Statistical variables originate from an analysis of a covariance of asset returns. By this one extracts the factors by several suitable decompositions.
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