Follmer-Schweizer Decomposition and Mean-Variance Hedging for General Claims
Monat, Pascale ; Stricker, Christophe
Ann. Probab., Tome 23 (1995) no. 3, p. 605-628 / Harvested from Project Euclid
Let $X$ be an $\mathbb{R}^d$-valued special semimartingale on a probability space $(\Omega, \mathscr{F}, (\mathscr{F}_t)_{0\leq t \leq T},P)$ with decomposition $X = X_0 + M + A$ and $\Theta$ the space of all predictable, $X$-integrable processes $\theta$ such that $\int\theta dX$ is in the space $\mathscr{J}^2$ of semimartingales. If $H$ is a random variable in $\mathscr{L}^2$, we prove, under additional assumptions on the process $X$, that $H$ can be written as the sum of an $\mathscr{F}_0$-measurable random variable $H_0$, a stochastic integral of $X$ and a martingale part orthogonal to $M$. Moreover, this decomposition is unique and the function mapping $H$ with its decomposition is continuous with respect to the $\mathscr{L}^2$-norm. Finally, we deduce from this continuity that the subspace of $\mathscr{L}^2$ generated by $\int\theta dX$, where $\theta\in \Theta$, is closed in $\mathscr{L}^2$, and we give some applications of this result to financial mathematics.
Publié le : 1995-04-14
Classification:  Semimartingales,  stochastic integrals,  Follmer-Schweizer decomposition,  Kunita-Watanabe decomposition,  orthogonal martingales,  60G48,  60H05,  90A09
@article{1176988281,
     author = {Monat, Pascale and Stricker, Christophe},
     title = {Follmer-Schweizer Decomposition and Mean-Variance Hedging for General Claims},
     journal = {Ann. Probab.},
     volume = {23},
     number = {3},
     year = {1995},
     pages = { 605-628},
     language = {en},
     url = {http://dml.mathdoc.fr/item/1176988281}
}
Monat, Pascale; Stricker, Christophe. Follmer-Schweizer Decomposition and Mean-Variance Hedging for General Claims. Ann. Probab., Tome 23 (1995) no. 3, pp.  605-628. http://gdmltest.u-ga.fr/item/1176988281/