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Multilayer networks represent multiple types of connections between the same set of nodes. Clearly, a multilayer description of a system adds value only if the multiplex does not merely consist of independent layers. In real-world multiplexes, it is expected that the observed inter-layer overlap may result partly from spurious correlations arising from the heterogeneity of nodes, and partly from true inter-layer dependencies. It is therefore important to consider rigorous ways to disentangle these two effects. In this paper, we introduce an unbiased maximum entropy model of multiplexes with controllable intra-layer node degrees and controllable inter-layer overlap. The model can be mapped to a generalized Ising model, where the combination of node heterogeneity and inter-layer coupling leads to the possibility of local phase transitions. In particular, we find that node heterogeneity favors the splitting of critical points characterizing different pairs of nodes, leading to link-specific phase transitions that may, in turn, increase the overlap. By quantifying how the overlap can be increased by increasing either the intra-layer node heterogeneity (spurious correlation) or the strength of the inter-layer coupling (true correlation), the model allows us to disentangle the two effects. As an application, we show that the empirical overlap observed in the International Trade Multiplex genuinely requires a nonzero inter-layer coupling in its modeling, as it is not merely a spurious result of the correlation between node degrees across different layers. [ABSTRACT FROM AUTHOR]

Real-world social and economic networks typically display a number of particular topological properties, such as a giant connected component, a broad degree distribution, the small-world property and the presence of communities of densely interconnected nodes. Several models, including ensembles of networks, also known in social science as Exponential Random Graphs, have been proposed with the aim of reproducing each of these properties in isolation. Here, we define a generalized ensemble of graphs by introducing the concept of graph temperature, controlling the degree of topological optimization of a network. We consider the temperature-dependent version of both existing and novel models and show that all the aforementioned topological properties can be simultaneously understood as the natural outcomes of an optimized, low-temperature topology. We also show that seemingly different graph models, as well as techniques used to extract information from real networks are all found to be particular low-temperature cases of the same generalized formalism. One such technique allows us to extend our approach to real weighted networks. Our results suggest that a low graph temperature might be a ubiquitous property of real socio-economic networks, placing conditions on the diffusion of information across these systems. [ABSTRACT FROM AUTHOR]

We exploit the symmetry concepts developed in the companion review of this article to introduce a stochastic version of link reversal symmetry, which leads to an improved understanding of the reciprocity of directed networks. We apply our formalism to the international trade network and show that a strong embedding in economic space determines particular symmetries of the network, while the observed evolution of reciprocity is consistent with a symmetry breaking taking place in production space. Our results show that networks can be strongly affected by symmetry-breaking phenomena occurring in embedding spaces, and that stochastic network symmetries can successfully suggest, or rule out, possible underlying mechanisms. [ABSTRACT FROM AUTHOR]

In this review we establish various connections between complex networks and symmetry. While special types of symmetries (e.g., automorphisms) are studied in detail within discrete mathematics for particular classes of deterministic graphs, the analysis of more general symmetries in real complex networks is far less developed. We argue that real networks, as any entity characterized by imperfections or errors, necessarily require a stochastic notion of invariance. We therefore propose a definition of stochastic symmetry based on graph ensembles and use it to review the main results of network theory from an unusual perspective. The results discussed here and in a companion paper show that stochastic symmetry highlights the most informative topological properties of real networks, even in noisy situations unaccessible to exact techniques. [ABSTRACT FROM AUTHOR]

Crowded trades by similarly trading peers influence the dynamics of asset prices, possibly creating systemic risk. We propose a market clustering measure using granular trading data. For each stock, the clustering measure captures the degree of trading overlap among any two investors in that stock, based on a comparison with the expected crowding in a null model where trades are maximally random while still respecting the empirical heterogeneity of both stocks and investors. We investigate the effect of crowded trades on stock price stability and present evidence that market clustering has a causal effect on the properties of the tails of the stock return distribution, particularly the positive tail, even after controlling for commonly considered risk drivers. Reduced investor pool diversity could thus negatively affect stock price stability. [ABSTRACT FROM AUTHOR]

The concepts of economic fitness and complexity, based on iterative and interdependent definitions of the quality of exporting countries and exported products, have led to novel insights into the dynamics of production and trade. A key step in the calculation of these quantities is the preliminary identification of statistically relevant country-product pairs.In this paper, we propose a method that could improve the current practice of filtering based on the revealed comparative advantage, by employing the maximum-entropy principle to construct an unbiased link weight probability distribution that, unlike the traditional thresholding method, allows for the statistical assessment of empirical trade volumes. The result is an adjusted geometric distribution for trade links that refines the revealed comparative advantage approach. This allows us to define the statistical significance of each trade link weight, leading to statistically supported trade link filtering decisions. Using this statistically justified filtering method, we have obtained results that are similar in nature to those that were found without this method, even though there are significant deviations in the details. In addition, the statistical information thus obtained on each trade link allows us to perform a spectral analysis of the export portfolio of individual economies. [ABSTRACT FROM AUTHOR]