Lesson 5: The Correlation Trap. Assets that look uncorrelated in calm markets often crash together when it actually matters.
In a panic, do independent assets stay independent?
Answer from instinct before we define the trap.
Assessment
Two assets normally drift fairly independently of each other. In the worst week of a market panic, are they more or less likely to move together?
Worst week of the panic ☕ Do they still drift apart?