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.

Watch this lesson with Tessa. The full video, worked example, calculator, quiz and Ask Tessa are part of Money Globe X Gold and Platinum. Create your account to start learning.

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Educational information only - not financial advice.

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