Platykurtic

AAA

DEFINITION of 'Platykurtic'

A type of statistical distribution where the points along the X-axis are highly dispersed, resulting in a lower peak (lower kurtosis) than the curvature found in a normal distribution. This low peak, with corresponding thin tails, means the distribution is less clustered around the mean than in a mesokurtic or leptokurtic distribution. Platykurtic is derived from the prefix "platy" which means "broad," resembling its shape - flat, wide or broad. A distribution is platykurtic when the excess kurtosis value is negative. 

A distribution is more leptokurtic (peaked) when the kurtosis value is a large positive value, and a distribution is more platykurtic (flat) when the kurtosis value is a large negative value.

Source: Barnard.edu

INVESTOPEDIA EXPLAINS 'Platykurtic'

The platykurtic distribution's flat shape results from large variations within observations. Investors may consider the kurtosis of asset returns when evaluating a potential investment, since the distribution of values can provide an estimate of asset risk.

A platykurtic distribution denotes a fairly uniform lay out of data, and returns following this distribution will have fewer large fluctuations than assets displaying normal or leptokurtic distributions. This makes the investment less risky.

Equity returns are generally considered to be closer to a leptokurtic distribution than to a normal or platykurtic distribution. If market returns were more platykurtic, events such as black swans would be less likely to occur, since that type of outlier is less likely to fall within a platykurtic distribution’s short tails. Conservative investors will be more comfortable dealing with investments with a platykurtic return distribution.

RELATED TERMS
  1. Volatility Smile

    A u-shaped pattern that develops when an option’s implied volatility ...
  2. Leptokurtic

    A statistical distribution where the points along the X-axis ...
  3. Volatility Skew

    The difference in implied volatility (IV) between out-of-the-money, ...
  4. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  5. Skewness

    Describe asymmetry from the normal distribution in a set of statistical ...
  6. Kurtosis

    A statistical measure used to describe the distribution of observed ...
RELATED FAQS
  1. What is the difference between a simple random sample and a stratified random sample?

    Simple random samples and stratified random samples differ in how the sample is drawn from the overall population of data. ... Read Full Answer >>
  2. What are the advantages and disadvantages of using systematic sampling?

    As a statistical sampling method, systematic sampling is simpler and more straightforward than random sampling. It can also ... Read Full Answer >>
  3. What is the difference between the standard error of means and standard deviation?

    The standard deviation, or SD, measures the amount of variability or dispersion for a subject set of data from the mean, ... Read Full Answer >>
  4. What level of correlation among investments will guarantee market returns but have ...

    The efficient frontier set forth by modern portfolio theory (MPT) can provide an estimate of an optimal portfolio that allows ... Read Full Answer >>
  5. What is a "non linear" exposure in Value at Risk (VaR)?

    The value at risk (VaR) is a statistical risk management technique that determines the amount of financial risk associated ... Read Full Answer >>
  6. What are some examples of positive correlation in economics?

    Positive correlation exists when two variables move in the same direction. A basic example of positive correlation is height ... Read Full Answer >>
Related Articles
  1. Markets

    Using Historical Volatility To Gauge Future Risk

    Use these calculations to uncover the risk involved in your investments.
  2. Markets

    The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  3. Fundamental Analysis

    Calculating Covariance For Stocks

    Learn how to figure out how two stocks might move together in the future by calculating covariance.
  4. Fundamental Analysis

    Find The Right Fit With Probability Distributions

    Discover a few of the most popular probability distributions and how to calculate them.
  5. Options & Futures

    Volatility's Impact On Market Returns

    Find out how to adjust your portfolio when the market fluctuates to increase your potential return.
  6. Bonds & Fixed Income

    Find The Highest Returns With The Sharpe Ratio

    Learn how to follow the efficient frontier to increase your chances of successful investing.
  7. Active Trading Fundamentals

    How To Convert Value At Risk To Different Time Periods

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  8. Options & Futures

    An Introduction To Value at Risk (VAR)

    Volatility is not the only way to measure risk. Learn about the "new science of risk management".
  9. Active Trading

    Modern Portfolio Theory: Why It's Still Hip

    See why investors today still follow this old set of principles that reduce risk and increase returns through diversification.
  10. Forex Education

    A Simplified Approach To Calculating Volatility

    Though most investors use standard deviation to determine volatility, there's an easier and more accurate way of doing it.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center