




Kurtosis, of Greek origin meaning "bulging" or "swelling", is a measurement used to determine the peakedness of a data distribution. It essentially measures a bell curve. In other words, Kurtosis measures whether the data is sharp or flat relative to a normal distribution. Since Kurtosis measures the shape of the distribution (the fatness of the tails), it focuses on how returns are ranged around the mean. A Kurtosis coefficient of three indicates a normal distribution. Kurtosis of less than three indicates a low peak with a fat midrange on either side; this is referred to as platykurtic. Conversely, Kurtosis greater than three indicates a sharp/high peak with a thin midrange and fat tails; this is called leptokurtic. Therefore, put simply, Kurtosis describes how bunched around the center or spread at the endpoints a frequency distribution is. Investors can use the information of Kurtosis to describe trends found in the charts to assess volatility; sometimes Kurtosis is called "the volatility of volatility." Kurtosis is like skewness, except skewness only measures one tail's fatness.
Rate this Kurtosis definition...




Where is the market headed? The answer may surprise you. Find out with the exclusive & Barron's recommended charts of Chart of the Day. 

Popular Terms: diluted share, real GDP, exdividend, FICO score, option premium, Zero Cost Collar, whollyowned subsidiary, required rate of return, FTSE, LIBOR, labor relations, 144a, EBITDA, irrevocable trust, balance sheet, risk management, 401a, 1035 exchange, annual return, retained earnings, debt service coverage, 1031 exchange, Key Rate Duration, dividends payable, implied volatility, class C shares, quality assurance, in escrow, deferred revenue, minority interest, exdividend date, reverse mortgage, per diem, APR, liquidity ratio, current ratio, margin rate, cancelled check, open position, stock market close, VIX, inflation, stock split, command economy, limit order, phantom income, covered put, average price per share, deferred tax


 