Copula Models

Copula models are statistical tools that help us understand and describe how different variables are related, especially their dependence structure. Instead of focusing solely on individual distributions (like averages), copulas let us model the way variables move together—whether they tend to increase or decrease together, or show more complex relationships—regardless of their individual behaviors. This is particularly useful in fields like finance or risk management, where understanding the joint behavior of multiple factors is crucial for accurate analysis and decision-making.