Last Updated: July 12, 2025
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Overview
This module delivers risk-aware analysis of asset correlations and diversification benefits within a portfolio. It helps optimize risk reduction by modeling inter-asset relationships and their impact on overall portfolio volatility.
The RISI Framework Breakdown for Correlation and Diversification Modeling
| Step | Name | Purpose |
|---|---|---|
| R | Role | Sets the AI’s posture and persona as an institutional portfolio optimization analyst. |
| I | Insight | Analyzes asset correlation matrices and diversification effects on portfolio risk. |
| S | Strategy | Simulates portfolio adjustments to maximize diversification and minimize risk. |
| I | Impact | Provides actionable guidance on portfolio construction to enhance risk-adjusted returns. |
How to Use the Correlation and Diversification Modeling Module
Copy and paste these prompts into ChatGPT sequentially, replacing [TARGET] with your target portfolio.
What to enter for [TARGET]:
A brief summary of your portfolio holdings, e.g.:
- “My Growth Equity Portfolio,”
- Or, “Tech Sector Holdings.”
- Role Prompt:
Activate ProRiskMan Mode for Institutional Portfolio Correlation and Diversification Analysis - Correlation Analysis Prompt:
Summarize correlation patterns among assets within [TARGET]. Limit output to one paragraph. - Diversification Benefits Prompt:
Analyze diversification effects and potential risk reduction in [TARGET]. Limit output to one paragraph. - Strategy (Simulation) Prompt:
Simulate portfolio adjustments to optimize diversification and minimize risk. Limit output to one paragraph. - Impact (Implications) Prompt:
Summarize actionable portfolio construction recommendations for improved risk management. Provide one clear, actionable paragraph grounded in institutional behavior.
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