Correlation
Risk & psychologyThe degree to which two assets move together.
In plain terms
Five banks is one bet, not five positions. Correlation is hidden concentration.
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Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Correlation convergence
Risk & psychologyThe tendency for correlations between holdings to move towards one during a severe market-wide decline.
In plain terms
Diversification helps least exactly when it is needed most, because in a panic people sell what they can rather than what they want to.
Strategy correlation
Risk & psychologyThe extent to which two systems lose money at the same time.
In plain terms
Diversification is defined by whether drawdowns coincide, not by whether the rules look different.
RSU
Market basicsAlso called: Restricted Stock Unit
Restricted Stock Unit — a grant of the employer's shares themselves, delivered once vesting conditions are met, with nothing to pay.
In plain terms
Unlike an ESOP it cannot become worthless, only worth less. The real problem is correlation: your salary and a large slice of your savings then depend on the same company.
SPAN margin
DerivativesThe core initial margin on a derivatives position, computed as the worst single-day loss across a grid of simulated price and volatility scenarios.
In plain terms
It rises when volatility rises, which is precisely the day the position is losing money. The margin call and the loss are correlated by design, and that correlation is what turns a bad session into a forced exit.