MONEY GLOBE XProfessional Risk Management · Lesson 2
Portfolio risk and correlation
Five trades can be one big bet
Professional - Gold & Platinum
In this lesson
Measure total open risk and see how correlation changes the real risk of a portfolio.
Key takeaways
- Portfolio heat = total risk of all open positions; many cap it at ~5–6%.
- Highly correlated positions behave like one larger position.
- Two-asset volatility: √(w₁²σ₁² + w₂²σ₂² + 2w₁w₂ρσ₁σ₂).
- Correlations tend to rise in crises — diversification is weakest when you need it most.
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Next lesson: Drawdowns and risk of ruin
Educational information only - not financial advice.