Correlation risk is important - and goes hand in hand with capital preservation. For example, say the Tech sector is presenting 5 different stocks for a short. If you choose to execute all 5 positions, that would be risking 5%. Instead, you can eliminate the correlation risk, by choosing to execute only the top 1 or 2 stocks. Meaning you’re only risking 1% or 2% at the most in that case.
In this lesson, you’ll learn how to calculate your position size (i.e. how much you are buying or selling of a particular stock, or cryptocurrency, etc), and put together all of the concepts you’ve already learned relating to risk management.
