# Define: Kurtosis

UK Accounting Glossary

#### Quick Summary of Kurtosis

The sharpness of the peak of a frequency-distribution curve.

### 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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#### 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: 10th February 2020.