A useful way to think about this: correlation is not a static fact about two assets; it is a regime-dependent relationship. Desk note: Assets that diversify each other in calm periods can suddenly move together when liquidity dominates fundamentals. Why investors care: That is why diversification should be tested under stress logic, not only under average conditions. Translate it into behavior: A portfolio that looks balanced in a spreadsheet may still compress into one trade when the common driver becomes funding stress. Where people usually get tripped up: The mistake is treating historical average correlation as a permanent law. Keep this nearby on the next review: Before reacting, ask what mechanism would still matter here if the headline disappeared tomorrow. The point is not to memorize the label. The point is to know what variable is actually doing the work.