The structural role of weak and strong links in a financial market network

DOI10.1140/EPJB/E2008-00237-3zbMATH Open1189.91117arXiv0805.2477OpenAlexW2131841184MaRDI QIDQ978665FDOQ978665

Authors: Antonios Garas, Panos Argyrakis, Shlomo Havlin 

Publication date: 25 June 2010

Published in: The European Physical Journal B. Condensed Matter and Complex Systems (Search for Journal in Brave)

Abstract: We investigate the properties of correlation based networks originating from economic complex systems, such as the network of stocks traded at the New York Stock Exchange (NYSE). The weaker links (low correlation) of the system are found to contribute to the overall connectivity of the network significantly more than the strong links (high correlation). We find that nodes connected through strong links form well defined communities. These communities are clustered together in more complex ways compared to the widely used classification according to the economic activity. We find that some companies, such as General Electric (GE), Coca Cola (KO), and others, can be involved in different communities. The communities are found to be quite stable over time. Similar results were obtained by investigating markets completely different in size and properties, such as the Athens Stock Exchange (ASE). The present method may be also useful for other networks generated through correlations.

Full work available at URL: https://arxiv.org/abs/0805.2477

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Mathematics Subject Classification ID

Social networks; opinion dynamics (91D30) Small world graphs, complex networks (graph-theoretic aspects) (05C82) Applications of statistical and quantum mechanics to economics (econophysics) (91B80)

Cites Work

• Statistical mechanics of complex networks
• Collective dynamics of ‘small-world’ networks
• Title not available (Why is that?)
• Title not available (Why is that?)

Cited In (7)

• Dynamical clustering of exchange rates
• STRUCTURALLY DYNAMIC SPIN MARKET NETWORKS
• Switching processes in financial markets
• Disentangling bipartite and core-periphery structure in financial networks
• Ak-shell decomposition method for weighted networks
• Resilience of networks formed of interdependent modular networks
• Explosive percolation in the human protein homology network

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