← Learn
Portfolio6 min read

Combining vaults: what diversification can and cannot do

Blending strategies reduces risk only when they lose money at different times. How to check that before you commit.

Correlation is the whole game

Holding five vaults that all run long-biased crypto momentum is holding one strategy in five wrappers. When the market turns, they draw down together.

The Portfolio Builder computes pairwise correlation of daily returns over the window where all selected vaults have data, then shows whether the blend actually produced a shallower drawdown than the weighted average of its parts.

Diversification decays under stress

Correlations measured in calm markets underestimate what happens in a liquidation cascade. Treat every modelled blended drawdown as an optimistic estimate.

Two or three is usually enough

Most of the benefit arrives with the second and third genuinely different strategy. Beyond that you mostly add monitoring burden and dilute your best ideas.

Educational content only. Nothing here is investment advice.