Complex Systems: From Nuclear Physics to Financial Markets

TL;DR

This paper compares correlation structures in nuclear physics and financial markets, revealing similarities in coherence and chaos, and demonstrating how proper time-zone adjustments unify market behaviors.

Contribution

It introduces a comparative analysis of coherence in nuclei and financial markets, highlighting the role of time-zone adjustments and eigenvalue gaps in understanding market collectivity.

Findings

Proper time-zone delay aligns DAX and Dow Jones markets

Largest eigenvalue indicates collective market behavior

Financial log-periodicity shows criticality-analog phenomena

Abstract

We compare correlations and coherent structures in nuclei and financial markets. In the nuclear physics part we review giant resonances which can be interpreted as a coherent structure embedded in chaos. With similar methods we investigate the financial empirical correlation matrix of the DAX and Dow Jones. We will show, that if the time-zone delay is properly accounted for, the two distinct markets largely merge into one. This is reflected by the largest eigenvalue that develops a gap relative to the remaining, chaotic eigenvalues. By extending investigations of the specific character of financial collectivity we also discuss the criticality-analog phenomenon of the financial log-periodicity and show specific examples.