What is the difference between platykurtic and leptokurtic

Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Mesokurtic Mesokurtic is a statistical term describing the shape of a probability distribution.

Discover more about mesokurtic distributions here. What Is Excess Kurtosis? Excess kurtosis describes a probability distribution with fat fails, indicating an outlier event has a higher than average chance of occurring. Kurtosis Kurtosis is a statistical measure used to describe the distribution of observed data around the mean.

It is sometimes referred to as the "volatility of volatility. Understanding Leptokurtic Distributions Leptokurtic distributions are statistical distributions with kurtosis over three. Tail Risk in Investments Tail risk is portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution.

Normal Distribution Normal distribution is a continuous probability distribution wherein values lie in a symmetrical fashion mostly situated around the mean. Partner Links. A leptokurtic distribution is the opposite of a platykurtic distribution.

It has an excess kurtosis that is positive. While choosing where to invest, investors will consider which statistical distributions are correlated with the various types of investments. More risk-averse investors may prefer platykurtic-distributed assets and markets because those assets are less likely to yield severe results. Three specific forms of statistical distribution exist—leptokurtic, mesokurtic, and platykurtic.

Such distributions differ based on how much excess kurtosis they have, which is related to the likelihood of extreme positive or negative events. The standard distribution, which is a type of mesokurtic distribution, has three kurtoses. Therefore, kurtosis distributions greater than three are said to have "positive excess kurtosis," while those with less than three kurtoses are said to have "negative excess kurtosis.

Though mesokurtic distributions have a kurtosis of three, the positive and negative excess kurtosis in it are of the leptokurtic and platykurtic distributions respectively. It helps to understand where the most information is lying and analyze the outliers in a given data.

Skewness is a measure of the degree of lopsidedness in the frequency distribution. Conversely, kurtosis is a measure of degree of tailedness in the frequency distribution. Skewness is an indicator of lack of symmetry , i. Skewness is a measure of the symmetry of a distribution. In an asymmetrical distribution a negative skew indicates that the tail on the left side is longer than on the right side left-skewed , conversely a positive skew indicates the tail on the right side is longer than on the left right-skewed.

What is a Positively Skewed Distribution? In statistics, a positively skewed or right-skewed distribution is a type of distribution in which most values are clustered around the left tail of the distribution while the right tail of the distribution is longer.

What is leptokurtic and platykurtic? Asked by: Ben Considine. What does a kurtosis of 3 mean? What kurtosis tells us? What does a kurtosis of 0 mean? Is high kurtosis good or bad? How kurtosis is calculated? What does positively skewed mean?

How do you interpret skewness and kurtosis? An extreme positive kurtosis indicates a distribution where more of the values are located in the tails of the distribution rather than around the mean. McLeod, S. What is kurtosis? Toggle navigation.