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On the potential of quantum walks for modeling financial return distributions

Stijn De Backer (UGent) , Jan Ryckebusch (UGent) , Koen Schoors (UGent) and Luis E C Rocha (UGent)
(2025) PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS. 657.
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Abstract
Accurate modeling of the temporal evolution of asset prices is crucial for understanding financial markets. We explore the potential of discrete-time quantum walks to model the evolution of asset prices. Return distributions obtained from a model based on the quantum walk algorithm are compared with those obtained from classical methodologies. We focus on specific limitations of the classical models, and illustrate that the quantum walk model possesses great flexibility in overcoming these. This includes the potential to generate asymmetric return distributions with complex market tendencies and higher probabilities for extreme events than in some of the classical models. Furthermore, the temporal evolution in the quantum walk possesses the potential to provide asset price dynamics.
Keywords
Financial return distributions, Quantum walks, POWER LAWS, STOCK RETURNS, TIME-SERIES, ENTROPY, TAILS, FLUCTUATIONS, DECOHERENCE

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Citation

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MLA
De Backer, Stijn, et al. “On the Potential of Quantum Walks for Modeling Financial Return Distributions.” PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS, vol. 657, 2025, doi:10.1016/j.physa.2024.130215.
APA
De Backer, S., Ryckebusch, J., Schoors, K., & Rocha, L. E. C. (2025). On the potential of quantum walks for modeling financial return distributions. PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS, 657. https://doi.org/10.1016/j.physa.2024.130215
Chicago author-date
De Backer, Stijn, Jan Ryckebusch, Koen Schoors, and Luis E C Rocha. 2025. “On the Potential of Quantum Walks for Modeling Financial Return Distributions.” PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS 657. https://doi.org/10.1016/j.physa.2024.130215.
Chicago author-date (all authors)
De Backer, Stijn, Jan Ryckebusch, Koen Schoors, and Luis E C Rocha. 2025. “On the Potential of Quantum Walks for Modeling Financial Return Distributions.” PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS 657. doi:10.1016/j.physa.2024.130215.
Vancouver
1.
De Backer S, Ryckebusch J, Schoors K, Rocha LEC. On the potential of quantum walks for modeling financial return distributions. PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS. 2025;657.
IEEE
[1]
S. De Backer, J. Ryckebusch, K. Schoors, and L. E. C. Rocha, “On the potential of quantum walks for modeling financial return distributions,” PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS, vol. 657, 2025.
@article{01JE3JDN1R0YSE63ZATZHA1G1B,
  abstract     = {{Accurate modeling of the temporal evolution of asset prices is crucial for understanding financial markets. We explore the potential of discrete-time quantum walks to model the evolution of asset prices. Return distributions obtained from a model based on the quantum walk algorithm are compared with those obtained from classical methodologies. We focus on specific limitations of the classical models, and illustrate that the quantum walk model possesses great flexibility in overcoming these. This includes the potential to generate asymmetric return distributions with complex market tendencies and higher probabilities for extreme events than in some of the classical models. Furthermore, the temporal evolution in the quantum walk possesses the potential to provide asset price dynamics.}},
  articleno    = {{130215}},
  author       = {{De Backer, Stijn and Ryckebusch, Jan and Schoors, Koen and Rocha, Luis E C}},
  issn         = {{0378-4371}},
  journal      = {{PHYSICA A-STATISTICAL MECHANICS AND ITS APPLICATIONS}},
  keywords     = {{Financial return distributions,Quantum walks,POWER LAWS,STOCK RETURNS,TIME-SERIES,ENTROPY,TAILS,FLUCTUATIONS,DECOHERENCE}},
  language     = {{eng}},
  pages        = {{16}},
  title        = {{On the potential of quantum walks for modeling financial return distributions}},
  url          = {{http://doi.org/10.1016/j.physa.2024.130215}},
  volume       = {{657}},
  year         = {{2025}},
}
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