System Sunday: Outrun Correlation Before It Outruns You
One-minute exposure check—overlap is hidden leverage.
Today’s thought
Correlation kills faster than leverage.
Three longs in the same sector turn a diversified portfolio into one oversized bet. When they move together, mark-to-market swings magnify far beyond the risk you thought you took. The illusion of diversification counts tickers; the truth counts factors. In a volatility spike, correlated positions cliff-dive in unison, shredding equity faster than a margin call can dial your phone.
Tiny action – List every open long by sector. If any column shows more than three names, trim until you’re back to three or less before tonight’s close.
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