XL Edge Guide · Copula
Copulas: when your inputs move together
A simulation that draws every input on its own quietly assumes they have nothing to do with each other. In a real business, volume, price and cost are linked. A copula lets you keep each input's own distribution and still make them move together, as much or as little as you believe they do.
What the guide covers
In this guide
- 1The idea in one paragraph
- 2Using the ribbon
- 3The example: assumptions
- 4The calculation engine
- 5Checking that the copula did its job
- 6Results: what correlation changes
- 7The charts
- 8Choosing a copula
- 9Practical advice
- 10Argument reference
What it uses
- Functions
fx.RiskCopulaGaussλfx.RiskCopulaTλfx.RiskCholeskyλClayton, Gumbel and Frank- In the ribbon
- XL Edge tab › Productivity Tools › Stat Tools › Insert Monte Carlo Copula
- Example workbook
- A manufacturer's income statement, 10,000 trials, on illustrative assumptions. Every number in the guide is read from it.
- Needs
- Excel for Microsoft 365. The workbook carries its own functions in Name Manager, so it calculates with or without XL Edge installed.
Inside
The first four pages
More XL Edge Guides
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- Monte CarloShould we build Plant 2?
- Multivariate Time SeriesSeries that move together: VAR and VECM
- Outliers and LeverageFinding the observations that don't fit
- PortfolioThe efficient frontier in four formulas
- SARIMAForecasting a series with a yearly rhythm