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. Cokurtosis

    A statistical measure that calculates the degree of peak of a ...
  5. Mesokurtic

    A term used in a statistical context where the kurtosis of a ...
  6. Kurtosis

    A statistical measure used to describe the distribution of observed ...
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. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center