Is stochastic calculus essential for HFT/StatArb quant?

[mhy]

I think Stochastic Calculus is important to know because it really lays out the foundation for pricing any derivative payoff, as well as the various risks associated with such payoffs. You can price stock options, futures, forwards, FX, interest rate derivatives, and pretty much anything using Stochastic Calculus - I think what it does at least from a practical standpoint is it unites the (usually very disparate) worlds of equities, futures and commodities, and fixed income into one very solid framework which then yield closed form solutions and PDE's for derivative prices that you can solve numerically.

Whether it is still applicable in today's world is an entirely separate matter altogether.

 

[TehRaio]

you strip stochal from the curriculum, what if it becomes useful once again in a decade or so?
also what do you replace it with?

 

[C S]

you strip stochal from the curriculum, what if it becomes useful once again in a decade or so?
also what do you replace it with?

There is plentiful research on statistics-based derivative pricing. One could even wonder whether these papers, mainly by academics, are just beginning to touch upon what some practitioners already know.