Risk Management

Correlation-Adjusted Position Size Calculator

Enter your normal (uncorrelated) position size and its correlation to what you already hold to get a size cut for the risk that overlaps. A new position that tracks your existing exposure adds less diversification than its size suggests.

Base Position Size (units, shares, or $ risk)

Correlation to Existing Position(s) (-1 to 1)

Size multiplier (√(1-ρ²))···

Adjusted position size···

Size reduction···

Educational tool only, not financial advice. Uses a simplified √(1-ρ²) diversification approximation from portfolio variance math. Correlations shift over time and head toward 1 under stress.

Built by Jason Parker, founder of Trading Ranges.