Diversification

This handles the math behind portfolio diversification, from basic two-asset variance formulas through efficient frontier construction and risk contribution analysis. You'll reach for it when building portfolios, computing correlations, or explaining why holding 50 tech stocks isn't actually diversified. It covers minimum variance portfolios, diversification ratios, and factor-based approaches. The most useful bit is probably the risk contribution decomposition, which shows exactly which positions drive your portfolio volatility. One thing to know: it's grounded in the reality that correlations spike during crises, so the examples include stress-testing correlation matrices rather than pretending diversification always works when you need it.