DEFINITION of 'Mesokurtic'

Mesokurtic is a statistical term used to describe the outlier (or rare, extreme data) characteristic of a probability distribution. A mesokurtic distribution has similar extreme value character as a normal distribution. Kurtosis is a measure of tails, or extreme values, of a probability distribution. With greater kurtosis, extreme values (e.g., values five or more standard deviations from the mean) occasionally occur.

BREAKING DOWN 'Mesokurtic'

Distributions may be described as mesokurtic, platykurtic and leptokurtic. Mesokurtic distributions have a kurtosis of zero, matching that of the normal distribution, or normal curve, also known as a bell curve. In contrast, a leptokurtic distribution has fatter tails. This means that the probability of extreme events is greater than that implied by the normal curve. Platykurtic distributions, on the other hand, have lighter tails, and the probability of extreme events is lesser than that implied by the normal curve. In finance, the probability of an extreme event that is negative is called "tail risk."

Risk managers also must be concerned about probability distributions with "long tails." In a distribution with a long tail, the probability of a highly extreme event is non-negligible.

Kurtosis is an important concept in finance because it affects risk management. Investment returns are assumed to be distributed normally, that is, to be distributed in a normal, bell-shaped curve. In reality, returns fall into a leptokurtic distribution, with "fatter tails" than the normal curve. This means that the probability of large losses or large gains is greater than would be expected if returns matched a normal curve.


  1. Platykurtosis

    Platykurtosis is a statistical term that refers to the relative ...
  2. Leptokurtic

    A statistical distribution where there are extreme points(or ...
  3. Platykurtic

    A type of statistical distribution where the points along the ...
  4. Tail Risk

    A form of portfolio risk that arises when the possibility that ...
  5. Excess Kurtosis

    Excess kurtosis describes a probability distribution with fat ...
  6. Normal Distribution

    A probability distribution that plots all of its values in a ...
Related Articles
  1. Trading

    Trading with Gaussian models of statistics

    The study of statistics originated from Carl Friedrich Gauss and helps us understand markets, prices and probabilities, among other applications.
  2. Investing

    What's Skewness?

    Skewness describes how a data distribution leans.
  3. Investing

    Optimize your portfolio using normal distribution

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

    Fat Tail Risk Makes Global Warming Scarier

    The cost of global warming does not take into account climate change-related catastrophes. Here's where fat-tail distributions come in.
  5. Insights

    U.S. Recession Without a Yield Curve Warning?

    The inverted yield curve has correctly predicted past recessions in the U.S. economy. However, that prediction model may fail in the current scenario.
  6. Financial Advisor

    How to Save Clients from RMD Aggregation Mistakes

    Advisors can help clients avoid required minimum distribution mistakes in their retirement plans.
  7. Investing

    The impact of an inverted yield curve

    Understand how the relationship between short- and long-term interest rates contributes to an inverted yield curve – a noteworthy economic event.
  8. Financial Advisor

    Stretch Your Savings By Working Into Your 70s

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

    Calculating volatility: A simplified approach

    Though most investors use standard deviation to determine volatility, there's an easier and more accurate way of doing it: the historical method.
  10. Investing

    Multivariate Models: The Monte Carlo Analysis

    This decision-making tool integrates the idea that every decision has an impact on overall risk.
  1. 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 >>
  2. 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 >>
Hot Definitions
  1. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  2. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  3. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
Trading Center