Platykurtic

What is 'Platykurtic'

Platykurtic is 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

BREAKING DOWN '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. Leptokurtic

    A statistical distribution where the points along the X-axis ...
  2. Mesokurtic

    A term used in a statistical context where the kurtosis of a ...
  3. Platykurtosis

    A statistical measure that indicates the level of peakedness ...
  4. Kurtosis

    A statistical measure used to describe the distribution of observed ...
  5. Normal Distribution

    A probability distribution that plots all of its values in a ...
  6. Excess Kurtosis

    A statistical term describing that a probability, or return distribution, ...
Related Articles
  1. Term

    What a Normal Distribution Means

    Normal distribution describes a symmetrical data distribution, where most of the results lie near the mean.
  2. Professionals

    Distribution of Returns

    Distribution of Returns
  3. Professionals

    Skew And Kurtosis

    CFA Level 1 - Statistical Concepts And Market Returns - Skew And Kurtosis
  4. Professionals

    Common Probability Distribution Properties

    CFA Level 1 - Common Probability Distributions - Properties
  5. Fundamental Analysis

    Find The Right Fit With Probability Distributions

    Discover a few of the most popular probability distributions and how to calculate them.
  6. Forex Education

    Trading With Gaussian Models Of Statistics

    The entire study of statistics originated from Gauss and allowed us to understand markets, prices and probabilities, among other applications.
  7. Investing Basics

    Using Normal Distribution Formula To Optimize Your Portfolio

    Normal or bell curve distribution can be used in portfolio theory to help portfolio managers maximize return and minimize risk.
  8. Retirement

    403(b) Plan: Distributions

    By Denise Appleby Generally, amounts received by an employee as a distribution from a 403(b) account are taxable as ordinary income to the employee. If the distribution occurs when the employee ...
  9. Taxes

    401(k) And Qualified Plans: Distributions

    By Denise ApplebyGenerally, the law requires plans to pay retirement benefits no later than the time an employee reaches normal retirement age, and many plans provide earlier payments under certain ...
  10. Financial Advisors

    How to Navigate Taxable Mutual Fund Distributions

    It's almost time for year-end capital gains distributions for mutual funds. Here's how to monitor them and minimize their tax impact.
RELATED FAQS
  1. Is my non-qualified Roth IRA distribution subject to taxes or early distribution ...

    The ordering rules must be applied to determine whether the distribution is subject to income taxes and/or the early distribution ... Read Answer >>
  2. What are the exceptions to the early distribution penalty for a non-qualified Roth ...

    The exceptions are as follows: The distribution is made on or after the date you reach age 59.5 The distribution is made ... Read Answer >>
  3. What are the advantages of having fewer distribution channels?

    Understand what a distribution channel is and how companies leverage them to sell products. Learn about the advantages of ... Read Answer >>
  4. How are distribution channels generally organized?

    Find out how distribution channels are commonly organized, and learn about the most important elements in the distribution ... Read Answer >>
  5. What does Value at Risk (VaR) say about the "tail" of the loss distribution?

    Learn about value at risk and conditional value at risk and how both models interpret the tail ends of an investment portfolio's ... Read Answer >>
  6. What are some ways to make a distribution channel more efficient?

    Understand what a distribution channel is and how companies use them to move product. Learn how to make a distribution channel ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center