Holy grail distribution
What is Holy grail distribution?
This is a probability distribution considered the ideal distribution for so-called "tail risk" hedging funds.
Where have you heard of Holy grail distribution?
You might have heard of it in relation to investments. Experts say it's often missing from portfolios seeking protection from tail risk events combined with positive average returns.
What you need to know about Holy grail distribution.
This distribution has a positive mean and a right fat tail. This means it displays the returns profile of an investment vehicle that produces small returns centred on zero and sometimes exhibits outsized positive returns. Usually, the distribution of historical returns of most asset classes is negatively skewed, showing a fat left tail. Tails on the left and right represent the least likely outcomes. A long-term investor aims to minimise left tail risk without losing out on right tail growth.