# Correlated risk

`kaal:entity:correlated-risk`

**Status.** derived

This node is assembled mechanically from the 3 claims that carry the concept tag `correlated-risk`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

3 claims across 2 works, 2012 to 2019.

**2012**

- [1998455-003](https://wulfkaal.github.io/claims/1998455-003) [mechanism/argued] *(failure mode)* -- Because governments prioritize the rescue of systemically important financial institutions over other entities, those institutions are incentivized to adopt similar risk profiles and to correlate their risks.
  > Government prioritization of SIFI bailouts could incentivize SIFIs to adopt similar risk profiles and correlate risks.
  Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455
- [1998455-037](https://wulfkaal.github.io/claims/1998455-037) [failure/argued] *(failure mode)* -- Combining the existing prioritization of bailouts for systemically important institutions with central bank purchases of their contingent capital in a given jurisdiction would further incentivize those institutions to adopt similar risk profiles and correlate their risks.
  > Combining bailout prioritization with central bank CCS purchases in a given jurisdiction could further incentivize SIFIs to adopt similar risk profiles and corre- late risks.
  Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455

**2019**

- [3405660-006](https://wulfkaal.github.io/claims/3405660-006) [failure/evidenced] *(failure mode)* -- LTCM was diversified across markets but not across strategy, so its positions failed together; market level diversification does not imply strategy level diversification.
  > It became obvious that while the fund was diversified in terms of markets, its overall strategy was not diversified.
  Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/correlated-risk.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.