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In the field of computational finance, one is commonly interested in the expected value of a financial derivative whose payoff depends on the solution of stochastic differential equations (SDEs). For multi-dimensional SDEs with…

Numerical Analysis · Mathematics 2024-09-12 Chenxu Pang , Xiaojie Wang

In this paper, we implement a weak Milstein Scheme to simulate low-dimensional stochastic differential equations (SDEs). We prove that combining the antithetic multilevel Monte-Carlo (MLMC) estimator introduced by Giles and Szpruch with the…

Numerical Analysis · Mathematics 2019-12-17 Kristian Debrabant , Azadeh Ghasemifard , Nicky C. Mattsson

In this paper, we first derive Milstein schemes for an interacting particle system associated with point delay McKean-Vlasov stochastic differential equations (McKean-Vlasov SDEs), possibly with a drift term exhibiting super-linear growth…

Numerical Analysis · Mathematics 2023-06-21 Jianhai Bao , Christoph Reisinger , Panpan Ren , Wolfgang Stockinger

In this paper we introduce a new multilevel Monte Carlo (MLMC) estimator for multi-dimensional SDEs driven by Brownian motions. Giles has previously shown that if we combine a numerical approximation with strong order of convergence…

Computational Finance · Quantitative Finance 2014-05-19 Michael B. Giles , Lukasz Szpruch

In this article, we propose a Milstein finite difference scheme for a stochastic partial differential equation (SPDE) describing a large particle system. We show, by means of Fourier analysis, that the discretisation on an unbounded domain…

Numerical Analysis · Mathematics 2012-04-09 Michael B. Giles , Christoph Reisinger

The multilevel Monte Carlo (MLMC) method is highly efficient for estimating expectations of a functional of a solution to a stochastic differential equation (SDE). However, MLMC estimators may be unstable and have a poor (noncanonical)…

Computational Finance · Quantitative Finance 2024-05-07 Christian Bayer , Chiheb Ben Hammouda , Raul Tempone

We introduce three related but distinct improvements to multilevel Monte Carlo (MLMC) methods for the solution of systems of stochastic differential equations (SDEs). Firstly, we show that when the payoff function is twice continuously…

Numerical Analysis · Mathematics 2013-09-10 L. F. Ricketson

In this article we consider the approximation of expectations w.r.t. probability distributions associated to the solution of partial differential equations (PDEs); this scenario appears routinely in Bayesian inverse problems. In practice,…

Computation · Statistics 2017-02-07 Alexandros Beskos , Ajay Jasra , Kody Law , Raul Tempone , Yan Zhou

In order to approximate solutions of stochastic partial differential equations (SPDEs) that do not possess commutative noise, one has to simulate the involved iterated stochastic integrals. Recently, two approximation methods for iterated…

Probability · Mathematics 2019-10-09 Claudine von Hallern , Andreas Rößler

Higher order schemes for stochastic partial differential equations that do not possess commutative noise require the simulation of iterated stochastic integrals. In this work, we propose a derivative-free Milstein type scheme to approximate…

Probability · Mathematics 2020-06-16 Claudine von Hallern , Andreas Rößler

In this article we develop a new sequential Monte Carlo (SMC) method for multilevel (ML) Monte Carlo estimation. In particular, the method can be used to estimate expectations with respect to a target probability distribution over an…

Computation · Statistics 2017-03-16 Alexandros Beskos , Ajay Jasra , Kody Law , Youssef Marzouk , Yan Zhou

This article is concerned with the multilevel Monte Carlo (MLMC) methods for approximating expectations of some functions of the solution to the Heston 3/2-model from mathematical finance, which takes values in $(0, \infty)$ and possesses…

Numerical Analysis · Mathematics 2024-03-12 Xiaojuan Wu , Siqing Gan

Stochastic differential equations (SDEs) offer powerful and accessible mathematical models for capturing both deterministic and probabilistic aspects of dynamic behavior across a wide range of physical, financial, and social systems.…

Statistics Theory · Mathematics 2026-02-17 Paromita Banerjee , Anirban Mondal

In this paper, we introduce the $\sigma$-antithetic multilevel Monte Carlo (MLMC) estimator for a multi-dimensional diffusion which is an extended version of the original antithetic MLMC one introduced by Giles and Szpruch \cite{a}. Our aim…

Probability · Mathematics 2024-01-26 Mohamed Ben Alaya , Ahmed Kebaier , Thi Bao Tram Ngo

A new explicit stochastic scheme of order 1 is proposed for solving commutative stochastic differential equations (SDEs) with non-globally Lipschitz continuous coefficients. The proposed method is a semi-tamed version of Milstein scheme to…

Numerical Analysis · Mathematics 2021-10-13 Yulong Liu , Yuanling Niu , Xiujun Cheng

The identification of parameters in mathematical models using noisy observations is a common task in uncertainty quantification. We employ the framework of Bayesian inversion: we combine monitoring and observational data with prior…

Computation · Statistics 2018-05-11 Jonas Latz , Iason Papaioannou , Elisabeth Ullmann

The Multilevel Monte Carlo (MLMC) method has proven to be an effective variance-reduction statistical method for Uncertainty Quantification (UQ) in Partial Differential Equation (PDE) models, combining model computations at different levels…

Mathematical Software · Computer Science 2023-05-24 Santiago Badia , Jerrad Hampton , Javier Principe

In this paper we consider sequential joint state and static parameter estimation given discrete time observations associated to a partially observed stochastic partial differential equation (SPDE). It is assumed that one can only estimate…

Numerical Analysis · Mathematics 2020-09-11 Yaxian Xu , Ajay Jasra , Kody J. H. Law

This paper applies several well-known tricks from the numerical treatment of deterministic differential equations to improve the efficiency of the Multilevel Monte Carlo (MLMC) method for stochastic differential equations (SDEs) and…

Numerical Analysis · Mathematics 2014-12-23 Eike H. Mueller , Rob Scheichl , Tony Shardlow

Stochastic partial differential equations (SPDEs) are often difficult to solve numerically due to their low regularity and high dimensionality. These challenges limit the practical use of computer-aided studies and pose significant barriers…

Numerical Analysis · Mathematics 2025-02-04 Abdul-Lateef Haji-Ali , Håkon Hoel , Andreas Petersson
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