March 21, 2006

Hedging on Clusters

Anonymous Reader writes "If anyone ever asks, "How do clusters make money?", you can answer simply by saying, "the old fashion way, they earn it." Clusters have been used in the Finance sector for quite a while and their use continues to increase.

One way clusters earn their keep is by helping to forecast and predict risk. Like forecasting the weather, timeliness is important, because yesterdays forecast is of no value if we get the answer tomorrow. Similarly, financial institutions need to do an almost real-time analysis on market derivatives to determine the Value At Risk (VAR). In the late eighties and early nineties, institutions realized that they could divide up the large portfolios of derivative positions and use parallel computers to perform VAR calculations thereby providing the almost real-time analysis they desired."


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