Extreme Value Theory (EVT) is a statistical approach that focuses on analyzing
extreme events or values in data, rather than assuming a normal or symmetric distribution. It
provides a framework for understanding and modeling the behavior of extreme values that
exceed a certain threshold. Unlike traditional statistical methods that focus on central
tendencies, EVT concentrates on the tail behavior of distributions. In quantitative finance, EVT
is used for modeling extreme stock market returns, assessing tail risks through measures like
Value at Risk (VaR) and Expected Shortfall (ES), analyzing extreme losses in portfolio
management, and calculating risk measures for extreme events.