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Dupire's functional It\^o calculus provides an alternative approach to the classical Malliavin calculus for the computation of sensitivities, also called Greeks, of path-dependent derivatives prices. In this paper, we introduce a measure of…

Computational Finance · Quantitative Finance 2018-06-20 Samy Jazaerli , Yuri F. Saporito

We use the abstract method of (local) martingale problems in order to give criteria for convergence of stochastic processes. Extending previous notions, the formulation we use is neither restricted to Markov processes (or semimartingales),…

Probability · Mathematics 2021-08-27 David Criens , Peter Pfaffelhuber , Thorsten Schmidt

We provide an It\^o's formula for $C^1$-functionals of flows of conditional marginal distributions of continuous semimartingales. This is based on the notion of weak Dirichlet process, and extends the $C^1$-It\^o's formula in Gozzi and…

Probability · Mathematics 2024-04-30 Bruno Bouchard , Xiaolu Tan , Jixin Wang

We develop the rough path counterpart of It\^o stochastic integration and - differential equations driven by general semimartingales. This significantly enlarges the classes of (It\^o / forward) stochastic differential equations treatable…

Probability · Mathematics 2017-09-18 Peter K. Friz , Huilin Zhang

The differential systems satisfied by orthogonal polynomials with arbitrary semiclassical measures supported on contours in the complex plane are derived, as well as the compatible systems of deformation equations obtained from varying such…

Exactly Solvable and Integrable Systems · Physics 2018-06-26 M. Bertola , B. Eynard , J. Harnad

We identify the linear space spanned by the real-valued excessive functions of a Markov process with the set of those functions which are quasimartingales when we compose them with the process. Applications to semi-Dirichlet forms are…

Probability · Mathematics 2017-09-07 Iulian Cîmpean , Lucian Beznea

Using Dupire's notion of vertical derivative, we provide a functional (path-dependent) extension of the It\^o's formula of Gozzi and Russo (2006) that applies to C^{0,1}-functions of continuous weak Dirichlet processes. It is motivated and…

Probability · Mathematics 2021-01-12 Bruno Bouchard , Grégoire Loeper , Xiaolu Tan

This paper considers the problem of constructing finite-dimensional state space realizations for stochastic processes that can be represented as the outputs of a certain type of a causal system driven by a continuous semimartingale input…

Optimization and Control · Mathematics 2024-02-16 Tanya Veeravalli , Maxim Raginsky

We establish a new scale of $p$-variation estimates for martingale paraproducts, martingale transforms, and It\^o integrals, of relevance in rough paths theory, stochastic, and harmonic analysis. As an application, we introduce rough…

Probability · Mathematics 2023-03-22 Peter Friz , Pavel Zorin-Kranich

We exhibit conditions under which the flow of marginal distributions of a discontinuous semimartingale $\xi$ can be matched by a Markov process, whose infinitesimal generator is expressed in terms of the local characteristics of $\xi$. Our…

Probability · Mathematics 2012-05-17 Amel Bentata , Rama Cont

We derive It\^o-type change of variable formulas for smooth functionals of irregular paths with non-zero $p-$th variation along a sequence of partitions where $p \geq 1$ is arbitrary, in terms of fractional derivative operators, extending…

Classical Analysis and ODEs · Mathematics 2021-11-30 Rama Cont , Ruhong Jin

We extend the It\=o formula \cite{MR1837298}*{Theorem 2.3} for semimartingales with rcll paths. We also comment on Local time process of such semimartingales. We apply the It\=o formula to L\'evy processes to obtain existence of solutions…

Probability · Mathematics 2016-09-23 Suprio Bhar

A comparison principle for stochastic integro-differential equations driven by Levy processes is proved. This result is obtained via an extension of an Ito formula from [11] for the square of the norm of the positive part of $L_2-$valued,…

Probability · Mathematics 2016-09-09 Konstantinos Dareiotis , Istvan Gyongy

In this article, we develop a semigroup-theoretic framework for the analytic characterisation of martingales with path-dependent terminal conditions. Our main result establishes that a measurable adapted process of the form \[ V(t) -…

Probability · Mathematics 2025-07-03 Robert Denk , Markus Kunze , Michael Kupper

In this paper we study the path-regularity and martingale properties of the set-valued stochastic integrals defined in our previous work Ararat et al. (2023). Such integrals have some fundamental differences from the well-known…

Probability · Mathematics 2023-08-28 Çağın Ararat , Jin Ma

This paper introduces the path derivatives, in the spirit of Dupire's functional It\^o calculus, for the controlled paths in the rough path theory with possibly non-geometric rough paths. The theory allows us to deal with rough integration…

Probability · Mathematics 2014-12-24 Christian Keller , Jianfeng Zhang

The pathway model for the real scalar variable case is re-explored and its connections to fractional integrals, solutions of fractional differential equations, Tsallis statistics and superstatistics in statistical mechanics, reaction-rate…

Statistical Mechanics · Physics 2024-05-21 Arak M. Mathai , Hans J. Haubold

This chapter is divided into two parts. The first is largely expository and builds on Karandikar's axiomatisation of It{\^o} calculus for matrix-valued semimartin-gales. Its aim is to unfold in detail the algebraic structures implied for…

Probability · Mathematics 2020-04-16 Kurusch Ebrahimi-Fard , Frédéric Patras

We establish a universal approximation theorem for signatures of rough paths that are not necessarily weakly geometric. By extending the path with time and its rough path bracket terms, we prove that linear functionals of the signature of…

Probability · Mathematics 2026-02-06 Mihriban Ceylan , Anna P. Kwossek , David J. Prömel

Given an It\^o semimartingale $X$, its Markovian projection is an It\^o semimartingale $\widehat{X}$, with Markovian differential characteristics, that matches the one-dimensional marginal laws of $X$. One may even require certain…

Probability · Mathematics 2026-05-26 Martin Larsson , Shukun Long