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A Weighted Tensor Principal Component Analysis on Intraday Stock Returns

A direct application of Tensor Principal Component Analysis (TPCA introduced by Babii et al. in 2022) of the intraday stock returns does not yield sensible result due to a combination of small sample, strong intraday heteroskedasticity, and large error. This paper proposes a weighted version of TPCA that can potentially mitigate the issue and preserve the asymptotic properties and test implications of the TPCA.