Econophysics describes the application of tools from statistical physics to the study of problems in economics such as correlations in stock prices or the distribution of wealth in society.
We present an analysis of financial data from stocks that belong to the London Stock Exchange, FTSE100, using the concept of random matrix theory and minimal spanning trees. This reveals a division of the stocks in industrial sub-sectors, mostly in good agreement with empirically derived groupings, but also indicating possible refinements, important for the use in portfolio optimisation. A similar analysis of market indices of different countries shows that despite globalisation strong regional geographical correlations still exist.
The general observation that the distribution of wealth in society takes the form of power-laws is reproduced by various physical models, based on the analogy with collisions of particles or Langevin type equations. We briefly review this and point to still existing difficulties in explaining the details of the distribution.
Keywords: statistical physics, econophysics, random matrix theory, minimal spanning trees, wealth distributions.