Catastrophe Risk and Hidden Correlations

By Paul Kedrosky · June 3, 2008 · ·

Spending a lot of timely lately mulling some issues related to catastrophe finance and spurious correlations. Anyone find interesting patterns in these two photos of burned homes from last October’s wildfires in San Diego County? How would you apply risk models in these two cases to capture salient differences? Could you?

Case 1:

Picture 1

Case 2:

Picture 2

[via RMS]

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