What is Stochastic Modelling?

Financial planning uses two types of models for financial projections – ‘deterministic’ and ‘stochastic’.

EV use a stochastic model, which is a more sophisticated type of modelling than deterministic. A stochastic model can forecast thousands of potential future economic scenarios. 

Our stochastic model runs 1,000 scenarios for every calculation. We then order and rank the scenarios to provide a realistic range of results for the financial projections. This is particularly useful when helping a client/user plan for their future.

For more information and examples on the differences between stochastic and deterministic modelling, please view our blog:

https://blog.ev.uk/stochastic-vs-deterministic-models-understand-the-pros-and-cons

In addition, you can download a preview of our stochastic vs deterministic book here:

https://info.ev.uk/deterministic-stochastic-forecasting-ebook

 

 

 

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