Spacetime finance

Spacetime finance is a theory which claims that not even finance can escape the fundamental laws of physics. The idea is exploring the relativity theory in relation to mathematical finance.

The volatility observed in financial instruments like stock prices will be different for different observers depending on their relative speed. For example the volatility of a stock from someone that leaves earth in a spaceship to return at a later point in time will observe a different volatility and time (time dilation) for the stock trading at earth as observed from the spaceship. However there will still be no arbitrage opportunities as the "volatility-time" will be invariant. That is simply because uncertainty (as typically measured in mathematical finance) is a function of how much something fluctuates over a given time period. The observed time and uncertainty will be observed different for different observers but the total uncertainty (product of time and fluctuations) will be the same for all observers (for the same asset trading at a given location).

Even if the implications of relativity theory theoretically and in some special cases can have measurable effects they currently seems to have no practical implications. The reason is simply that everyone at earth is traveling at about the same speed seen relatively to the speed of light.

Spacetime finance is fully consistent with Einstein's special and general relativity theory; it is not a new discovery in relativity theory, but simply a new application to a new field (mathematical finance). The reason there have been little or no focus on the implications for finance is probably because the effects upon finance are so small that they for any practical applications have no significance at the moment. From a theoretical perspective the idea could still be of interest, but it is a controversial and new topic where little or nothing have been published until very recently. For example this could change if the humans at any point long into the future should be able to develop space civilizations traveling in large spaceships at speeds significant to that of the speed of light. There is however no evidence that we will be able to do this in the near future.

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