Modeling and Forecasting Average Temperature for Weather Derivative Pricing

<div><svg height="11.3664pt" id="M23" style="vertical-align:-2.246059pt" version="1.1" viewbox="-0.0498162 -9.12034 25.2034 11.3664" width="25.2034pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.0135,0,0,-0.0135,0,0)"><path d="M720 -138C627 -96 538 -41 476 2C594 39 703 153 703 331C703 532 552 665 384 665C170 665 44 499 44 315C44 215 87 129 147 73C211 11 298 -11 355 -14C476 -99 554 -136 584 -144S664 -160 712 -159L720 -138ZM348 25C231 49 146 172 146 342C146 533 249 629 360 629C497 629 601 510 601 302C601 142 523 51 443 28C434 34 425 41 416 47L348 25Z" id="g190-82"></path><glyph.data ascent="989" descent="-360" horiz-adv-x="745" vert-adv-y="745"></glyph.data></g><g transform="matrix(.0135,0,0,-0.0135,10.093,0)"><path d="M300 253H71L57 198H286L300 253Z" id="g190-46"></path><glyph.data ascent="989" descent="-360" horiz-adv-x="356" vert-adv-y="356"></glyph.data></g><g transform="matrix(.0135,0,0,-0.0135,14.917,0)"><path d="M720 -138C627 -96 538 -41 476 2C594 39 703 153 703 331C703 532 552 665 384 665C170 665 44 499 44 315C44 215 87 129 147 73C211 11 298 -11 355 -14C476 -99 554 -136 584 -144S664 -160 712 -159L720 -138ZM348 25C231 49 146 172 146 342C146 533 249 629 360 629C497 629 601 510 601 302C601 142 523 51 443 28C434 34 425 41 416 47L348 25Z" id="g190-82"></path><glyph.data ascent="989" descent="-360" horiz-adv-x="745" vert-adv-y="745"></glyph.data></g></svg> plot of daily temperature difference.</div>

Advances in Meteorology

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Figure 4

Figure 4: Modeling and Forecasting Average Temperature for Weather Derivative Pricing 