Denoising Subordinated Probabilistic Models: Diffusion with a Tempered-Stable Volatility Clock, and What the Noise Mechanism Actually Controls
Heavy-tailed diffusion models replace Gaussian noise by a Gaussian variance mixture: denoising Levy probabilistic models (DLPM) take the mixing variables i.i.d. across coordinates, while Student-t EDM shares one mixing variable per sample. Neither has dynamics, yet temporal dependence of the noise amplitude - volatility clustering - is the defining stylized fact of financial returns. We introduce the Denoising Subordinated Probabilistic Model (DSPM), whose mixing vector is a stationary AR(1) chain driven by tempered-stable subordinator increments (the discrete Barndorff-Nielsen-Shephard volatility process) along the data axis. Conditionally on the chain the DDPM machinery survives verbatim; kurtosis and squared-noise autocorrelation are closed-form in the chain parameters, giving an exactly identified, analytically invertible calibration; DDPM, DLPM and Student-t noise are boundary cases of one memory parameter. We then prove a delimiting result: when the denoiser is conditioned on the mixing variables, their law is a nuisance - in the exact-denoiser limit the generated distribution is invariant to it and interventions on the chain do nothing. Experiments confirm both halves: conditioned models match the data's clustering whatever the mixing law, a designed x8 volatility shock moves the envelope by under 13%, while blind models transmit the mechanism exactly as calibrated. Finally, coupling the chain to the data by a variational volatility encoder - trained with the stochastic-volatility likelihood whose log-determinant the simplified denoising loss provably drops - restores control (shock response 3.07 vs. naive 2.83), recovers latent volatility (correlation 0.76), and learns the prior memory toward the true persistence.