Variance Decomposition | Models That Break | MTB012

Total trajectory variance decomposes exactly into variance of the conditional mean and mean of the conditional variance. This video shows what that identity encodes for stochastic models — and where the decomposition becomes misleading. ────────────────────────────────────────── Models That Break isolates the exact moment a model's assumptions stop holding. Part of a 4-channel ecosystem: Visual Finance · Models That Break · Medicine Is a System · Engineering Complex Systems · Visual Finance: https://www.youtube.com/@VisualFinance-EN · Models That Break: https://www.youtube.com/@ModelsThatBreak · Medicine Is a System: https://www.youtube.com/@MedicineIsaSystem · Engineering Complex Systems: https://www.youtube.com/@EngineeringComplexSystems