A New Functional Clustering Method with Combined Dissimilarity Sources and Graphical Interpretation

Clustering is an essential task in functional data analysis. In this study, we propose a framework for a clustering procedure based on functional rankings or depth. Our methods naturally combine various types of between-cluster variation equally, which caters to various discriminative sources of functional data; for example, they combine raw data with transformed data or various components of multivariate functional data with their covariance. Our methods also enhance the clustering results with a visualization tool that allows intrinsic graphical interpretation. Finally, our methods are model-free and nonparametric and hence are robust to heavy-tailed distribution or potential outliers. The implementation and performance of the proposed methods are illustrated with a simulation study and applied to three real-world applications.


Introduction
Cluster analysis is a critical step in exploratory data analysis intended to identify homogeneous subgroups among observations. Cluster analysis is also widely used for functional data in tasks such as the classification of electrocardiogram curves in the diagnosis of cardiovascular ischemic diseases [1] and the extraction of representative wind behavior [2,3]. The various functional data clustering methods described in the literature can generally be categorized into two subgroups: distance-based methods and filtering-based methods.
The distance-based methods involve the construction of a distance matrix with a specific metric; the clustering results may be derived with hierarchical or centroidbased clustering tools [3,4]. The filtering-based methods involve the approximation of the curves with linear combinations of finite basis functions, such as splines and functional principal components, and the cluster analysis is conducted based on the coefficients or scores of finite dimensions [5][6][7]. The focus of this study is on distance-based methods. In this paper, we propose a new family of clustering algorithms based on the chosen functional ordering. The dissimilarity matrix is constructed via the chosen functional ordering, which is applied to the set of differences of all pairs of the functional data under investigation. Various functional ordering can be chosen, but we concentrate on orderings with intrinsic graphical interpretation. But any ordering that treats the sources equally can be used, including the modified band depth [8] and the simplicial band depth [9]. The choice of functional ordering with intrinsic graphical interpretation allows us to show the resulting clusters and a central region that attains a natural interpretation. I.e., All functions contained in the central region do not leave the plot of the central region, and all functions not contained in the central region leave the plot of the central region in at least one point. It has to be mentioned that the classical functional orderings mentioned above do not satisfy this natural condition, and therefore we will concentrate on functional orderings defined in [10].
Functional data differ in various ways, such as in magnitude, shape, phase, and dependence structure, and hence they are difficult to analyze when clusters exist from multiple perspectives. The existing methods either focus on a single type of variation or pool the various sources of variation with weightings that rely on a delicate selection procedure. Without balancing, the clustering results could be dominated by the component with the greatest absolute variation. In order to achieve some balancing between the various sources, it is possible to standardize the curves before applying existing methods, such as k-means or model-based methods. By "standardization", we mean that the marginal empirical distributions are standardized so that they have zero mean and unit variance. This approach is used in the simulation study in order to compare the performance of existing methods with the proposed methods.
Since the proposed procedure applies functional ordering, such that every part of the function is treated equally, the different sources of variation are combined in an equal manner. For univariate cases, it may combine the raw curves and the derivatives equally to measure the magnitude and shape variation simultaneously. For multivariate cases, it may combine the marginal curves and the covariance functions equally to account for both marginal and joint variation among curves. Furthermore, the proposed method provides a reasonable graphical interpretation of the clustering result. Finally, it inherits the robustness of functional orderings and can stably recover the clusters when abnormal observations contaminate the data.
The remainder of this paper is organized as follows. In Section 2, we define the new proposed procedure with an arbitrary functional ordering. Further, we review several functional orderings already defined in [10] which satisfy the intrinsic graphical interpretation. Finally, we study the metric properties of derived dissimilarity. In Section 3, we describe the simulation studies we conducted to assess the performance of the proposed methods and compare them with some existing competitors in cases where the combination of the various sources is of interest. In Sections 4-6, we demonstrate the effectiveness of our method with three real-world examples. The proposed methods will be available soon in the R package GET.

Dissimilarity matrix
Assume that the functions f i x ð Þ, i ¼ 1, … , s are observed at a fixed set of points x 1 , … , x d , so that the functions can be represented as d-dimensional vectors T i , i ¼ 1, … , s. If the functions of interest are not observed at the same set of points, a nonparametric smoothing method can be applied to address the situation.
To induce dissimilarity measure from functional ordering, we construct the set of functional differences: We remark here that df 0 is an element of D f . We then apply a functional ordering to D f and obtain the induced measure of centrality of Finally, the dissimilarity between f i x ð Þ and f i 0 x ð Þ is defined as d ii 0 ¼ 1 À M ii 0 , and this forms the dissimilarity matrix of f i È É s i¼1 . Such an ordering can take the form of any functional depth notions or rankings in the literature, such as the band depth and modified band depth [8], the simplicial band depth [9], the spatial functional depth [11], or the curve depth [12]. These notions naturally give equal treatment to the variations at each design point, compared with the norm-based methods such as L 1 or L 2 distances.
After a dissimilarity matrix is established, the partitioning around medoids procedure can be used to determine the given number of clusters. This produces a family of clustering algorithms that depends on the choice of the functional ordering.
In the following, we will discuss the possible choices of functional ordering. First, we assume functional orderings, which take different sources of the data variability equally. We call such ordering combined functional ordering. Such an approach is useful when the investigator wants to join different information about the data and combine them in one universal procedure. Second, we review several functional orderings which satisfy the intrinsic graphical interpretation.
Our proposed procedure then consists of the following steps: 1. Choose the appropriate data sources (e.g., raw data, derivative and second derivative) 2. Choose the functional ordering, which allows for intrinsic graphical interpretation and which gives the same weight to every chosen source (e.g., the studentized maximum ordering, the area rank ordering).
3. Compute the dissimilarity matrix 4. Apply partitioning around medoids 5. Plot the resulted clusters together with their central region with intrinsic graphical interpretation.

Combined functional ordering
We consider now functions T i x ð Þ, i ¼ 1, … , s 0 and specify their combined functional ordering. Various perspectives, such as different magnitudes and different shapes of the functions, can be used to order the functions. Here we provide a general method to combine these different perspectives in an equal manner. As suggested by [13], data transformation is an effective method to convert different types of variation into types that are easy to handle by the functional depth. Hence, various transformations could be applied to the raw functions to obtain the transformed data sets of interest, such as V 1 , … , V k . These transformations are computed in the same fixed set of points x 1 , … , x d ; for instance, shifting each curve to zero means eliminates the magnitude variation, normalizing the centered curves by their L 2 norms, respectively, to extract pure shape information. In the case of multivariate functional data, each component of the data and their transformation could be treated similarly. Also, the covariance function between the components can be added to take into account the dependence structure.
We denote with V k T ij À Á the resultant curves of T ij via the transformation V k , and we can express the long vector as: We can then apply to them the corresponding ordering and hence construct the dissimilarity matrix. Note that each of the orderings to be introduced considers each element equally by ranking or scaling, so the desired perspectives of ordering are considered and treated equally in such a combined ordering. To enhance the interpretability of the clustering results, we focus only on the notions that satisfy the intrinsic graphical interpretation.

Functional ordering with intrinsic graphical interpretation
The following definition specifies the properties of the global envelope that has an intrinsic graphical interpretation with respect to an ordering. This definition was already used in [10] to define global envelope tests and central regions with graphical interpretation.
Definition 1: Assume a general ordering ≺ of the vectors T i , i ¼ 1, … , s 0 , that is induced by a univariate measure M i . That is, M i ≥ M j iff T i ≺ T j , which means that T i is less extreme or as extreme as T j . (The smaller the measure M i , the more interpretation (IGI) with respect to the ordering ≺ if: 1. m α ð Þ ∈ ℝ is the largest of the M i such that the number of those i for which M i < m α ð Þ is less than or equal to αs 0 ; Let us call the ordering with intrinsic graphical interpretation such ordering, for which exists a global envelope with IGI with respect to this ordering. Remark here that m α ð Þ is not exactly the α quantile of M i and that points 2 and 3 are equivalent. We kept points 2 and 3 to show the interpretability of the IGI. The simple ordering criterion based on L ∞ distance, M i ¼ max j |T ij À T :j |, clearly satisfies such a property, but it does not account for the changes in the marginal distribution of T :j for different values of j [14,15]. To address this problem, Myllymäki et al. [14] proposed studentized and directional quantile scaling of the maximum ordering, which also satisfies IGI. Furthermore, [15,16] simultaneously defined extreme rank length ordering, which is based on the number of the most extreme pointwise ranks and satisfies IGI. Finally, [10] extended this family with continuous rank ordering, which is based on the continuous extension of pointwise ranking, and area rank ordering, which is based on the area with the most extreme continuous ranks. To the best of our knowledge, no other functional (respective multivariate) orderings satisfy IGI.
The definitions of all previously mentioned orderings are given in [10]. For the sake of completeness, we provide here a short list of these definitions.

Extreme rank length ordering
Let r 1j , r 2j , … , r s 0 j be the raw ranks of T 1j , T 2j , … , T s 0 j , such that the smallest T ij has rank 1. In the case of ties, the raw ranks are averaged. The two-sided pointwise ranks are then calculated as R ij ¼ min r ij , s 0 þ 1 À r ij À Á . Consider now the vectors of pointwise ordered ranks The extreme rank length measure of the vectors R i is equal to: The division by s 0 leads to normalized ranks that obtain values between 0 and 1. Consequently, the ERL measure corresponds to the extremal depth as defined in [16].
Let e α be defined according to point 1 of Definition 2.3, and let be the index set of vectors less extreme than or as extreme as e α . Then, the 100 1 À α ð Þ% global extreme rank length envelope (or global extreme rank length central region) induced by E i is:

Global continuous rank ordering
The continuous rank measure is: where c ij are the pointwise continuous ranks defined as: Here, T iÀ1 ½ j and T iþ1 ½ j denote the values of the functions, which are in a j-th element below and above T ij , respectively (i.e., T iÀ1 The 100 1 À α ð Þ% global continuous rank envelope induced by C i is constructed in the same manner as the global extreme rank length envelope.

Global area rank ordering
The area rank measure: where.
and R ij are two-sided pointwise ranks defined above. The 100 1 À α ð Þ% global area rank envelope induced by A i is constructed in a manner similar to that of the global extreme rank length envelope.

Studentized maximum ordering
Because we construct a symmetric set of functions to compute the dissimilarity matrix, here we use only the symmetric studentized ordering. The above orderings are based on the whole distributions of T Áj , j ¼ 1, … , d. It is also possible to approximate the distribution from a few sample characteristics. The studentized maximum ordering approximates the distribution of T Áj , j ¼ 1, … , d by the sample mean T 0j and sample standard deviation sd T Áj À Á . The studentized measure is: The 100 1 À α ð Þ% global studentized envelope induced by S i is defined by: where s α is taken according to point 1 of IGI.

Dissimilarity matrix based on the combined ordering
In this section, we validate the dissimilarity matrix construction defined in Section 2.1 for studentized measure by showing that d ii 0 ¼ S ii 0 is a metric and for global area rank measure by showing that d ii 0 ¼ 1 À A ii 0 is a semi-metric. The latter means that the d ii 0 ¼ 1 À A ii 0 satisfies all properties of metric, except for the triangular inequality, which is violated in specific cases. The metric properties are usually required when choosing the distance measure, but it is not necessary for the partitioning around medoids algorithm, which is used to calculate the clusters afterward. Furthermore, our simulation study demonstrates that these specific cases, where the triangular inequality of global area rank measure is not satisfied, are not realized by functions appearing in real data studies. Furthermore, we provide a thorough check of satisfaction of the triangular inequality for global area rank measure in our implementation of the algorithm. Thus in practice, a user can check this feature of the metric for particular data of interest. For any dataset considered by us in simulation and data studies, the triangular inequality was satisfied. Theorem 1.1: Define the distance between T i and T i 0 as: Symmetry: This property holds implicitely due to the symmetry of D f . The fourth property of the metric, i.e.

Triangle inequality:
is not satisfied when T i t i for every i. The results of our simulation study suggest that if the system of data provides enough crossings of functions, then the triangle inequality is satisfied.

Theorem 1.2:
Define the distance between T i and T i 0 as:

Proof:
The first three properties obviously hold for the studentized difference distance. We prove the triangle inequality for d ii 0 . Note that df 0 is an element of D f , and hence the sample mean T 0j ¼ 0 for j ¼ 1, … , d. Lets denote the sample standard deviation of the jth element of D f by sd D Áj À Á . Then, we have: This completes the proof.

Simulation study
This section describes the intensive simulation studies we conducted to assess the empirical performance of the proposed clustering methods and compares this performance with those of the existing methods when the clusters demonstrate differences from various perspectives. For comparison, we also consider two clustering methods for functional data: the k-means methods available in the R package fda.usc [17] and the model-based clustering methods proposed by [18], which are available in the R package fdapace [19]. For the fairness of comparison, the standardization procedure is applied to normalize the empirical marginal distributions as described in Section 1 so that they can be combined equally.
Specifically, we consider the following five models on t ∈ 0, 1 ½ : Here, U follows a uniform distribution on 0:5, 0:6 ½ , and e T ð Þ is generated from a Gaussian process with zero mean and covariance function γ s, t ð Þ ¼ σ 2 exp Àϕ t À s j j ν f g , where σ 2 ¼ 0:2, ϕ ¼ 2 and ν ¼ 1. In addition, to assess the robustness of the proposed methods, we also consider another situation by replacing e T ð Þ with a multivariate-t distribution with two degrees of freedom, t 2 μ, Σ ð Þ, where μ ¼ 0, and Σ is generated with γ s, t ð Þ. The heavy tail property of the marginal distribution allows the data to be viewed as contaminated by some outliers, which are commonly encountered in practice. We generate 100 samples for each of the five classes with 20 equally spaced design points; as a result, 500 curves are clustered into five groups. The top panel of Figure 1 demonstrates one realization of the simulated samples under two settings. To account for both the magnitude and the shape variation among clusters, we make two transformations suggested by [13] to the raw curves, shifting the curves so that each has a zero mean and then normalizing the centered curves by their L 2 norm. We then bind the three components together as long vectors for clustering. For each run, we use the true number of clusters for all four methods and calculate the adjusted Rand index [20] to compare their clustering results. We repeat the procedure 100 times, and the results are reported in the bottom panel of Figure 1. Note that in all cases of the simulation study, the triangular inequality of the area measure was satisfied for all combinations of curves. Under the first setting, data are generated from a Gaussian process. With regard to the adjusted Rand index, the four methods are quite comparable but the proposed methods are slightly better than the other two. However, our methods recover much better the characteristics of the true clusters; see Figure 2, which illustrates one clustering result for each of the four methods with both raw curves and normalized curves. In contrast, the k-means method merges classes 2 and 5, and the model-based method merges classes 1 and 3.
As for the second setting, in which the marginal distribution becomes heavytailed, our methods obtain more robust clustering results than the other two methods and reach higher adjusted Rand indexes (Figure 3). The model-based method relies heavily on the Gaussian assumption and thus shows less satisfactory behavior. Again, our methods still accurately recover the patterns of each cluster, whereas the other two methods completely fail to reveal reasonable group structures. Specifically, both k-means and the model-based methods suggest a cluster with only a few curves, which indicates a clear misinterpretation of the situation.

Clustering of insurance penetration
Insurance consumption indicates the equilibrium of supply and demand of insurance products. For a given insurance market, the collection of total (Life and non-Life) yearly insurance consumption observations helps to explain the variation of insurance market development over time. A common measure of insurance consumption, and hence of insurance development, is insurance penetration (IP), defined as the ratio of insurance premiums on GDP. The pattern of the development variation is evident when one views the IP as a function of time, known as the IP curve.
In their effort to promote the European single insurance market through the integration process, European policymakers put emphasis on homogeneity and convergence aspects of development patterns of European insurance markets. That is equivalent to saying that they are interested in identifying a single group (cluster) of countries whose IP curves exhibit similarity in magnitude and shape. The clustering of European countries in terms of their IP curves provides a method for testing the magnitude and shape similarity of the insurance industry in Europe. In particular, functional clustering methods are appropriate for our data, given the time dependency in the observations. IP curves (time-series data on IP) originated from the Swiss Re (2016) Database were analyzed by the proposed functional clustering (FC) method based on Area measure. The exploration concentrated on the IP curves of 34 European countries (EU and non-EU members) observed over 13 years between 2004 and 2016, that is, before, during, and post-financial and sovereign debt crises.
The FC method extracts the partitioning information from both the magnitude and the shape of IP curves. While the magnitude is captured in the IP curves, the shape is not straightforward to be detected. To this end, we performed two types of transformations on the raw IP curves to reveal their shape. First, the raw IP curves were centred relative to each country's average IP rate to mitigate the widely different magnitudes in the IP data. After this, the resulting centred IP curves were then normalized with their L2 norms to a unit norm (to have a length of 1). These transformations are proposed to extract shape information by [13] By normalizing the centred IP curves in this manner, we eliminate their amplitude signal, while we are only left with the shape signal of the raw IP curves.
For the FC method to run properly, the most suitable number of clusters must be determined. We chose 6 clusters even if the median value of all methods presented in the NBclust library of the R software is 5. Our choice is justified as it better serves the analysis and the characterization of the produced clusters.
Given the IP curves of each cluster, the FC method also provides a graphical representation, through the central regions, of the deepest central IP curves within each cluster. We are interested in the so-called marginal plot style approach of the clustering solution. This means that the central regions are computed separately for magnitude and shape to better express each cluster component's shape. Remark here that the proposed method also allows showing the central region with respect to the combined ordering with respect to the magnitude and shape together. The appearance of clusters is demonstrated by the deepest IP curve (solid curve) that corresponds to the medoid IP curve and the envelope of 50% central IP curves (gray area) that reflects the band where 50% of the IP curves surrounding the deepest are varied. See Figures 4 and 5. Note that the fraction of combinations of countries satisfying the triangular inequality with Area measure was 1 with respect to all combinations. With this visualization, we can describe the clusters that are produced by the FC method as follows: Cluster 1: Developed insurance markets with middle-to-high IP levels and decreasing IP patterns in the whole period. This cluster includes Belgium, France, Ireland, Austria*, the UK, Portugal, Switzerland, Malta, Slovakia, and Germany. Cluster 2: Developing insurance markets with low-to-middle IP level and increasing IP pattern until 2010 and varying (decreasing) thereafter. This cluster of countries consists of Cyprus*, Turkey, Greece, and Luxemburg. Cluster 3: Developed insurance markets with middle-to-high IP levels and increasing IP patterns in the whole period. This cluster unites Finland*, Italy, Spain, Denmark, and the Netherlands. Cluster 4: Developing insurance markets with low-to-middle IP levels and increasing IP pattern until 2009 and decreasing thereafter. The within-cluster countries are Croatia*, Slovenia, Iceland, the Czech Republic, Sweden, and Romania. Cluster 5: Developing insurance markets with low-to-middle IP levels and almost quadratic IP pattern and vertex point in 2008. In this cluster, we see countries such as Russia*, Ukraine, and Norway. Cluster 6: Least Developed insurance markets with low IP level and increasing IP pattern followed by a decreasing one initiated in 2007, right on the start of the financial crisis. Members of this cluster are countries such as Lithuania*, Bulgaria, Hungary, Estonia, Serbia, and Poland. The * symbol denotes the medoid IP curve produced by the clustering for each cluster.
The results bring to surface first the difficulty of the European insurance industry to converge and to exhibit homogeneity among national insurance markets during the whole period. A fact that otherwise could lead to the building of single European insurance industry. Second and final, the differential behavior of European insurance markets under different phases of the macroeconomic environment. For instance, Least Developed non-EU insurance markets faced shrink challenges, especially during and after the financial and sovereign debt crises period. The same challenge with a time lag of approximately two years was obvious for some Developing insurance markets. Russia and Ukraine had their insurance markets running in parallel and separated from the other two Developing insurance markets to follow their own smile-shaped development pattern. A slight improvement in insurance activity was also observed for the remaining Developing insurance markets that lasted almost until the end of the sovereign debt crisis in 2011. However, this improvement was offset by their unstable development pattern thereafter. Over the past years, the overall development of Developed insurance markets has decreased, due to a contraction in life insurance business. However, few of them managed to succeed in an increasing pattern with varying IP rate changes over the years.

Clustering of population growth data
Over the last century, the world has seen rapid population growth. Particularly, the global population more than quadrupled. The magnitude of the population rate of change from one year to another is found by the fold change ratio (FCR). Fold change is calculated simply as the ratio of the year-end over the year-start population of a certain country. We refer to the evolution of FCR over the course of time as the population growth rate (PGF) curve. In this example, our objective is to find clusters of world countries in which their PGF curves share similar magnitude and shape properties. We use the output of the FC method based on Area measure for clustering world countries. This output will also give a hint towards the distribution of the world population and provide the trends or the dynamics that are defining our world, such that policymakers can set sustainable development goals for our societies.
Thus, we consider the world population data (United Nations 2016), which was analyzed by [21]. This dataset includes estimates of the total population (both sexes) in 233 countries, areas, or regions in July 1950-2015. Motivated by these estimates and the arguments needed for the execution of the FC method, we follow three steps. In the first step, we perform the preprocessing of the dataset by selecting those countries with populations of more than one million in July 1950. In total, 134 countries are included in our analysis. For each of these countries, we collect 65 data points that correspond to the FCR of each year interval and propose connecting them to make the PGF curve. In the second step, we derive the shape information from the L2 normalization of the shifted PGF curves towards their center. This particular step is the one that provides the set of PGF pattern (PGFP) curves. In the last step, we specify the input argument for the number of clusters which is required by FC method to start. The optimal number of clusters was arrived at by calculation of the median value of all methods presented in NBclust library of the R software. Based on the result of this calculation, the chosen number of clusters was three. Figure 6 satisfies the marginal plot style approach followed in our case studies by presenting the output of the FC method in a two-panel display. The first panel is dedicated to magnitude clustering (it helps discern broad trends in PGF curves), and the second to the shape clustering (it helps identify patterns of pace for population rate of change). The first plot of each panel is the plot of the median curves of the clusters. Remark that the fraction of combinations of countries satisfying the triangular inequality with Area measure was 1 with respect to all combinations.
Next, we present both the derived clusters and their characterization, which is based on the United Nations (UN) geographical region and classification of economies. For instance, we see that the population growth rates in Cluster 1 appear to follow an increasing trend or at least maintain a certain degree of stability because of a natural increase and migration. Most countries in this cluster have a developing economy and are mainly located in Sub-Saharan Africa. However, three European countries (Ireland, Norway and Spain) with developed economies are also members of this cluster of countries. In contrast, the other two characteristic population growth trends that are present in both Clusters 2 and 3 paint a picture of a stagnating or shrinking population in the future, the only difference being that the population in Cluster 3 has a faster speed of shrinkage than in Cluster 2. The most populated cluster (that is Cluster 2 with 64 curves) is mostly associated with another set of developing economies (such as those of Brazil, China and Singapore) located, this time, in Latin America and the Caribbean along with East Asia and Pacific. Additionally, the only developed economy that appears to reside in this cluster is that of the United States, while few economies in transition that belong to the Commonwealth of Independent States (such as those of Azerbaijan, Kazakhstan) make their presence visible for a first time.
Finally, Cluster 3 has united mostly the developed economies of Europe and East Asia and Pacific along with the economies in transition of South-Eastern Europe (Albania, Serbia and North Macedonia). Moreover, the population of few developing economies that are located, for example, at Cuba, Jamaica, Puerto Rico, Ghana and Mozambique, have distinguished themselves from the vast majority of developing economies in Cluster 1 or Cluster 2 by following the population behavior of developed economies.
In conclusion, developing economies and economies in transition are split between two clusters, while the majority of the developed economies belong to one cluster. Based on the characterization of these clusters, it is understood that countries with developing economies experience population growth (or at least population stability). However, the more the economy of a country is developed, the more its population growth change decreases. This decrease, in certain cases, might have even a severe negative effect on a country's future projected population size. Whereas, in some other cases, the effect of this decrease is smoother without forcing the population size to reach record lows.

Multivariate clustering of insurance penetration with ratio of life and total insurance
The insurance industry generates a large volume of multivariate functional data from the simultaneously obtained measurements on variables related to life, nonlife, and total insurance activities. In our case of interest, two main country-specific variables that include data on premiums are available. The first is the total IP (TIP) that represents the development of total activities. While the second is the R ratio of life IP to TIP that represents the development of the share of life premiums in total premiums.
Since the insurance industry of a country can be represented by the bivariate variables of TIP and R, it is important to take into account the dependence between them. We compute a variable that describes this dependence through the covariance function: where m 1 t ð Þ is the mean IP over all countries and m 2 t ð Þ is the mean R over all countries and represents the development of the link between total and life share dynamics.
There is no doubt that the development of total activities is different from that of life share. Nevertheless, it may be assumed that a common development coordinates these differential developments of different insurance variables. Then, it is of great interest to identify groups of insurance markets with similar joint development patterns. With this consideration in mind, we aim to discover whether the European insurance market is homogeneous when national insurance developments are jointly differential by developing their total activities and their life share.
We obtained again insurance data from Swiss Re (2016) database and for the same European (EU and non-EU) countries as in univariate case. In particular, we employ a dataset of our main variables for 34 European countries sampled at annual frequency between 2004 and 2016. That is to say that the data for each variable can be viewed as curves. Yet, except for the curves related to TIP and R variables, we also included the computed curves for the Cov variable in our dataset and ended up with a set of three-dimensional vectors of curves.
Viewing the curves for each variable as a set of curves, a three-component list of curve sets is constructed to serve as an input for the FC method. This time, the optimal number of clusters is three and consistent with the median value of all methods presented in the NBclust library of the R software. Our proposed method concentrates on visualizing, in the marginal plot style approach, clusters of multivariate insurance functional data with regard to their magnitudes and covariance function (Figures 7-9).
The clustering results are summarized as follows: Cluster 1: Countries of high TIP and high R with no correlation whatsoever between the two variables throughout the study period.
Cluster 2: Countries of high TIP and high R with a positive correlation between the two variables throughout the study period.
Cluster 3: Countries of low TIP and low R with no correlation whatsoever between the two variables throughout the study period.
Additionally, the FC method suggests that the total and life share developments in Cluster 1 and Cluster 3 have independent paths since curves for Cov variable almost coincide with the x-axis of Figure 9. Simultaneously, it succeeded not to clustered them together due to different magnitude levels. On the contrary, in  Cluster 2, the curves for Cov variable are positioned above x-axis, which means that total and life share are dependent functions (positively correlated) over the years.
The functional cluster analysis revealed some differences in the dynamics of insurance markets in Europe. The clustering results clearly reject the hypothesis on the homogeneity of the European insurance market. Europe continues in a twospeed insurance market, with countries with high development and independent paths of total and life insurance business, and others with low. For both speed markets, detecting an increasing pattern in total insurance business does not guarantee that the life premiums will also follow at the same time the same pattern. Any similarity in their patterns could be explained by socio, economic, demographic, or other factors and not by the total business pattern itself. However, there is another high-speed market where the increase of total insurance business in the economy is an additional factor that accelerates the development of life business share.

Conclusions
In this study, we introduce a new class of functional cluster analysis methods based on functional orderings. We intended to work with methods that allow intrinsic graphical interpretation to obtain a natural interpretation of clusters via their central regions. Therefore, we propose the use of a studentized measure that forms a metric on the set of functional differences. Also, We suggest the use of the area measure, which orders the functions according to the area of the most extreme continuous rank and considers the entire distribution of the functions. This measure does not form a metric on any set of functions, but the simulation study results and the real data study suggest that it is a metric on any real data set of functions. The check for the satisfaction of the triangular inequality is provided for the given set of functions.
This study's primary aim is to introduce methods that combine the various functional information sources equally. It is possible to study clustering while showing equal concern for both magnitude and shape, as shown in the first and second data examples. In other words, it is possible to study the clustering of multivariate functions when the marginal functions are taken equally. It is also possible to add to the study term, which summarizes the covariance between the marginals of the multivariate function, as shown in the third data example.
The simulation study suggests that the proposed method is robust and more powerful than studied alternatives that give equal treatment to various sources. The studied alternatives are the K-means method, with pre-standardization of every coordinate by its mean and variance, and the model-based method, which assumes a normal distribution of data and considers marginals means, variances, and the covariance function.
Our proposed methods consider the covariance structure of the functional data via the ordering of the entire functional differences. Our proposed methods are also nonparametric and, as such, have no model requirement. Our simulation study also showed that our proposed methods are quite robust to heavy-tailed functions, which can be considered as a type of functional cluster outlier. The data studies show that our methods can cluster the functions with respect to magnitude and shape and that it provides a sensible graphical interpretation of the resulting clusters. The third example shows that the clusters can be also constructed with respect to the covariance of the marginals in the multivariate function. This study does not examine methods to choose the number of clusters in an optimal manner, and this problem is left to the user's choice or further development.