One framing I keep coming back to is 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. A lot of confusion disappears once you separate the headline from the mechanism.