heavy-tailed distribution
[HEV-ee-tayld dis-tri-BYOO-shun]
nounpl: heavy-tailed distributions
distribuição de cauda pesada
1. A probability distribution whose tails are not exponentially bounded, meaning the probability of extreme values decreases more slowly than in exponential distributions, allowing for a higher occurrence of outliers
Stock market returns often follow a heavy-tailed distribution, which explains why extreme market crashes occur more frequently than predicted by normal distributions.
Os retornos do mercado de ações frequentemente seguem uma distribuição de cauda pesada, o que explica por que os crashes extremos do mercado ocorrem com maior frequência do que previsto pelas distribuições normais.
2. In statistics and risk management, a distribution characterized by the property that P(X > x) decays slower than exponentially as x approaches infinity
Insurance companies must account for heavy-tailed distributions when calculating premiums for catastrophic events.
As companhias de seguros devem levar em conta distribuições de cauda pesada ao calcular prêmios para eventos catastróficos.
Heavy-tailed distribution is primarily a technical term used in statistics, finance, and risk management. In Brazil, the term gained prominence following financial crises, particularly the 2008 global financial crisis, when financial professionals and academics emphasized the importance of understanding tail risk in markets. The concept is now integral to financial regulation and risk assessment frameworks in both Brazil and Portugal, reflecting global standards in quantitative finance.
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