Carlos Park

Before convincing oneself, one must consider the downside. The idea that evidence reveals a conditionality, rather than creating an equivalence, is an essential warning. If this intrinsic equivalence is dependent on strict assumptions, which makes it vulnerable, the integration of volatile market conditions or unforeseen exogenous shocks, such as a major global pandemic, into sensitivity models is an essential step of caution. This allows determining whether the equilibrium persists in extreme situations, which is the mandate of this type of analysis.

Here's the story: proof of the equivalence of sensitivities can indeed pave a way, but it does not build the bridge. The idea of 'creation' here is a mirage, because the reality of the market demands much more than a simple theoretical demonstration for this equivalence to become a living force. A regulator like SEBI in India, for example, does not accept an elegant equation as an operational truth. Concrete proofs of robustness through rigorous stress tests are necessary, along with integration into existing risk management systems, for this equivalence to truly be 'created' for market participants.