Dictionary > Finance > S > Stable Distribution

# Finance Dictionary - S Terms

# Stable Distribution

A probability distribution for which sums of random variables have the same distribution as the original random variable. Stable distribution can be classified as normal stable distribution and nonnormal stable distribution. The normal distribution is stable because sums of normally distributed random variables are stably distributed. Nonnormal stable distribution can be further classified into (a) Symmetric stable distribution and (b) non-symmetric stable distribution. This kind of distribution can be used to describe the distribution of the real return of the stock prices.