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The Correlation Spike Problem: How Macro Shocks Break Diversification | Crystal Ball Markets
Diversification is supposed to protect portfolios—but in the moments investors need it most, everything suddenly moves together. In this episode, we break down the macro forces that cause asset correlations to spike, why traditional diversification fails during stress, and how investors can rethink risk in a world where “uncorrelated” assets don’t stay uncorrelated.
🔍 What We Cover in This Episode
📌 1. Why Asset Correlations Break Down
How macro shocks override asset‑specific fundamentals
Why correlations rise sharply during recessions, liquidity crunches, and systemic stress
The role of…
The skinny
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