Stochastic Dominance

This short course introduces Stochastic Dominance (SD) as a powerful, non-parametric method for asset ranking and risk analysis.

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Suggested citation

Lupu, Radu (2025). Stochastic Dominance. Q2 ecosystem. Available at https://quantinar.com/course/904/stochastic-dominanc or http://dx.doi.org/10.24818/IDA-CL/2025.68.

@misc{lupu2025, author = {Lupu, Radu}, title = {Stochastic Dominance}, year = {2025}, howpublished = {Q2 ecosystem}, doi = {http://dx.doi.org/10.24818/IDA-CL/2025.68.}, url = {https://quantinar.com/course/904/stochastic-dominanc} }
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	Stochastic Dominance (pdf)	997.43 K

Requirements

Statistics, Utility theory, Risk aversion

General Overview

Description

This short course introduces Stochastic Dominance (SD) as a powerful, non-parametric method for asset ranking and risk analysis, going beyond traditional metrics like mean-variance optimization or correlation-based models. It highlights how SD can be applied in network-based risk assessment, with a focus on cryptocurrency markets as a volatile and interconnected financial environment.

Participants will learn:

The intuition behind First-Order (FSD) and Second-Order (SSD) Stochastic Dominance.
How SD captures investor preferences and risk aversion without requiring strict distributional assumptions.

This course is especially useful for students and researchers interested in systemic risk, portfolio selection, and crypto-asset analysis through the lens of distribution-based asset comparison.