Business, Legal & Accounting Glossary

Definition: Kurtosis

Quick Summary of Kurtosis

The sharpness of the peak of a frequency-distribution curve. In probability theory and statistics, kurtosis is a measure of the “tailedness” of the probability distribution of a real-valued random variable.

What is the dictionary definition of Kurtosis?

Dictionary Definition

statistics A measure of heaviness of the tails of a probability distribution, defined as the fourth cumulant divided by the square of the variance of the probability distribution.

Full Definition of Kurtosis

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 centre 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.

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Modern Language Association (MLA):
Kurtosis. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. July 04, 2020 https://payrollheaven.com/define/kurtosis/.
Chicago Manual of Style (CMS):
Kurtosis. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/kurtosis/ (accessed: July 04, 2020).
American Psychological Association (APA):
Kurtosis. PayrollHeaven.com. Retrieved July 04, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/kurtosis/

Definition Sources

Definitions for Kurtosis are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th April, 2020 | 1 Views.