Skewness and Kurtosis Explained | Stock Market Example

Skewness and kurtosis reveal how stock returns differ from a normal distribution by measuring asymmetry and the influence of extreme outcomes. You’ll learn how z-scores, cubed deviations, and fourth powers connect to skewness, kurtosis, and fat tails. I walk through S&P 500 daily returns with actual numbers, including skewness of about -0.63 and kurtosis of about 22. I also compare the market with the 68-95-99.7 rule and show how removing the October 19, 1987 crash changes both statistics. Whether you’re studying statistics or evaluating investment risk, this video gives you the tools to interpret skewness and kurtosis.

Chapters
0:00 – What the bell curve misses
0:59 – The S&P 500’s daily returns
1:45 – Skewness: which tail is longer
2:17 – Measuring skewness with z-scores
3:22 – Kurtosis: how fat the tails are
4:38 – Checking the 68-95-99.7 rule
4:56 – How one day moves the numbers

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*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Ryan O’Connell Finance LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.