Quantum Entanglement in Financial Markets: A Theoretical Perspective on Risk Analysis

This paper explores the theoretical application of quantum entanglement to risk analysis in financial markets, offering a novel perspective on interconnected financial systems. It discusses the limitations of classical risk models in addressing systemic risk and complex asset correlations and introduces quantum-inspired approaches that leverage entanglement to describe high-dimensional dependencies. Conceptual frameworks such as entangled financial networks, quantum probabilistic methods, and quantum-inspired risk metrics are presented, alongside their potential applications in portfolio diversification and systemic risk assessment. While promising, challenges such as computational complexity, feasibility, and real-world applicability remain significant. The paper concludes with directions for future research, emphasizing empirical validation and interdisciplinary collaboration to advance quantuminspired methodologies in finance.