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Alright, let's talk about one of the most fundamental concepts in trading and investing: correlation. Stick with me here, because understanding this little word can mean the difference between a well-diversified portfolio and a financial train wreck.
Ever noticed how some things just seem to go together? Peanut butter and jelly, bacon and eggs, or perhaps a cold beer on a hot summer day? Well, the same principle applies to the markets, where certain assets have an uncanny tendency to move in tandem. This delightful phenomenon is called positive correlation, and it's a concept every trader should wrap their head around.