Creating a Brownian motion with healthyR.ts
The final time series plot that we are going to showcase is the Brownian motion. Brownian motion, also known as the Wiener process, is a fundamental concept in finance and mathematics that describes the random movement of particles in a fluid. In the context of finance, it is often used to model the price movement of financial instruments such as stocks, commodities, and currencies.
Here are some of the key characteristics of Brownian motion:
- Randomness: Brownian motion is inherently random. The future direction and magnitude of movement at any point in time cannot be predicted with certainty.
- Continuous path: The path of a Brownian motion is continuous, meaning that the asset’s price can move smoothly without sudden jumps or gaps.
- Independent increments: The changes in the asset’s price over non-overlapping time intervals are independent of each other. In other words, the price movement in one interval does...
