Lévy Process

A Lévy process is a mathematical model used to describe stochastic processes that evolve over time with jumps, rather than just continuous movements. Think of it like the path of a stock price, which can fluctuate smoothly but also experience sudden increases or drops. Lévy processes are characterized by having stationary and independent increments, meaning changes happen in a consistent manner over time, regardless of when you look at them. They are useful in finance, insurance, and various scientific fields to model unpredictable events and irregular behaviors in data.