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. Kurtosis

    A statistical measure used to describe the distribution of observed ...
  3. Mesokurtic

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

    A statistical measure that indicates the level of peakedness ...
  5. Normal Distribution

    A probability distribution that plots all of its values in a ...
  6. Tail Risk

    A form of portfolio risk that arises when the possibility that ...
Related Articles
  1. Investing

    What a Normal Distribution Means

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

    Find The Right Fit With Probability Distributions

    Discover a few of the most popular probability distributions and how to calculate them.
  3. Trading

    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.
  4. Managing Wealth

    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.
  5. ETFs & Mutual Funds

    Stock Market Risk: Wagging The Tails

    The bell curve is an excellent way to evaluate stock market risk over the long term.
  6. Financial Advisor

    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.
  7. Retirement

    Stretch Your Savings By Working Into Your 70s

    Staying employed a little longer may allow for a more comfortable retirement.
  8. Investing

    Quantitative Analysis Of Hedge Funds

    Hedge fund analysis requires more than just the metrics used to analyze mutual funds.
  9. Trading

    What's Skewness?

    Skewness describes how a data distribution leans.
  10. ETFs & Mutual Funds

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
RELATED FAQS
  1. Can I elect to NOT have income tax withheld from an IRA (NOT ROTH) distribution before ...

  2. Can I replace the $7,000 in Jan 2016 and avoid paying taxes on the $7,000 excess ...

    I closed an IRA account in Jan 2015 and received $9,000. I forgot that and withdrew my required $7,000 minimum distribution ... Read Answer >>
  3. 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 >>
  4. Why are shareholder distributions eliminated and not added to the net income when ...

    When considering selling an S Corp. I am being told that shareholder distributions cannot be added back to determine its ... Read Answer >>
  5. I have an IRA with after-tax money in it. How do I avoid being taxed again?

  6. Do I have to claim the capital gain distribution on my federal return?

    Aren't capital gains only payable when you sell the underlying security? I'm getting a 1099-Div form from my mutual fund ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center