Managing correlated positions and overall portfolio exposure.
This scope is designed to help you build a practical understanding of Correlation & Exposure. Lessons move from core definitions to real-world context and common failure points.
Reading in order is recommended, but each lesson stands on its own.
Managing multiple positions is the discipline of measuring, aggregating, and controlling portfolio risk across several simultaneous trades. This article explains why correlation and exposure matter, how risks combine in practice, and where traders often misjudge diversification.
An in-depth explanation of how correlation and leverage shape portfolio risk, why they matter for capital protection, and how real-world exposures can hide concentration. The article clarifies definitions, measurement pitfalls, and the interaction between leverage, correlation regimes, and survivability.
Correlation between assets is not fixed. It drifts across regimes, volatility states, and structural changes, which alters portfolio diversification and hedge effectiveness. Understanding, measuring, and stress testing correlation drift is central to risk control and long-term survivability.
A rigorous examination of how hidden correlations, overlapping positions, and mismeasured risk create unintended exposure, and why avoiding these errors is central to protecting trading capital and long-term survivability. Includes practical examples, diagnostic concepts, and common misconceptions.
Correlation is a useful lens for understanding co-movements, yet it is an unstable and incomplete description of risk. This article defines the limits of correlation analysis, explains why those limits matter for capital protection and long-term survivability, and illustrates practical pitfalls that arise in real trading environments.
