In plotting a Histogram, Kurtosis describes the distribution and measures the outlying observations relative to the Mean, in terms of Standard Deviation. The extreme tail values will be + / – 3 Standard Deviations.
Kurtosis is a statistical measure used in describing the characteristics of a distribution and measures extreme values in either tail. In plotting a Histogram there is the general idea about the numerical measures of center, spread and outliers, which can give a general idea about the shape of the Histogram. Kurtosis is one of two numerical measures. The other is Skewness, which gives a more precise evaluation of the shape of the curve. Kurtosis is the fourth moment, the outlying observations relative to the Mean, the extreme tail values. The Kurtosis is measured as a multiple of the levels of Standard Deviation, around +/- 3 from the Mean. In investing in stocks, a high Kurtosis represents extreme returns. Negative Kurtosis needs to be hedged, to prevent the downside. Hedging these risks can be expensive.
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