Deterministic vs. Stochastic and Static vs. Dynamic

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Deterministic vs. Stochastic and Static vs. Dynamic

Postby brennan6738 » Thu Jan 13, 2011 1:28 pm

I am trying to model and forecast some quity indices using daily data. I woudl think when I create the model I want to use the Static option (as equity returns I believe will be independent of time, so using the Dynamic option would not seem to make sense). I am not quite as sure about the Deterministic vs. Stochastic option. I think most equity indices tend to have Stochastic properties where the initital conditions can change over time, but i am not positive. Anyone have any ideas?

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