High-low range in GARCH models of stock return volatility

C-Tier
Journal: Applied Economics
Year: 2016
Volume: 48
Issue: 51
Pages: 4977-4991

Score contribution per author:

1.005 = (α=2.01 / 1 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We suggest a simple and general way to improve the GARCH volatility models using the intraday range between the highest and the lowest price to proxy volatility. We illustrate the method by modifying a GARCH(1,1) model to a range-GARCH(1,1) model. Our empirical analysis conducted on stocks, stock indices and simulated data shows that the range-GARCH(1,1) model performs significantly better than the standard GARCH(1,1) model both in terms of in-sample fit and out-of-sample forecasting ability.

Technical Details

RePEc Handle
repec:taf:applec:v:48:y:2016:i:51:p:4977-4991
Journal Field
General
Author Count
1
Added to Database
2026-01-26