Convergence analysis of quasi-Monte Carlo sampling for quantile and expected shortfall

Author:

He Zhijian,Wang Xiaoqun

Abstract

Quantiles and expected shortfalls are usually used to measure risks of stochastic systems, which are often estimated by Monte Carlo methods. This paper focuses on the use of the quasi-Monte Carlo (QMC) method, whose convergence rate is asymptotically better than Monte Carlo in the numerical integration. We first prove the convergence of QMC-based quantile estimates under very mild conditions, and then establish a deterministic error bound of O ( N 1 / d ) O(N^{-1/d}) for the quantile estimates, where d d is the dimension of the QMC point sets used in the simulation and N N is the sample size. Under certain conditions, we show that the mean squared error (MSE) of the randomized QMC estimate for expected shortfall is o ( N 1 ) o(N^{-1}) . Moreover, under stronger conditions the MSE can be improved to O ( N 1 1 / ( 2 d 1 ) + ϵ ) O(N^{-1-1/(2d-1)+\epsilon }) for arbitrarily small ϵ > 0 \epsilon >0 .

Funder

National Natural Science Foundation of China

Publisher

American Mathematical Society (AMS)

Subject

Applied Mathematics,Computational Mathematics,Algebra and Number Theory

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