What if Cross-asset correlation spike collapses 60/40 diversification?
A regime shift drives stock-bond correlation positive, so both legs of the 60/40 portfolio fall together and diversification fails. The correlation shock forces risk-parity deleveraging and amplifies losses.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a risk-off shock. A regime shift drives stock-bond correlation positive, so both legs of the 60/40 portfolio fall together and diversification fails. The correlation shock forces risk-parity deleveraging and amplifies losses. The trigger decomposes into signed root‑shocks — Volatility (VIX) ▲ · Real yields ▲ · Risk appetite ▼ · Risk-parity deleveraging ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -1.4% hist -1.06–-0.11% · other way -0.29% (n=12) |
| 2 | Tech sector XLK 📈 chart | Equity | ▼ -1.0% hist -0.88–+0.13% · other way -0.38% (n=12) |
| 3 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -1.1% hist -1.08–+0.55% · other way +24.57% (n=12) |
| 4 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +0.9% hist -2.49–+1.92% · other way +3.18% (n=12) |
| 5 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -0.9% hist -8.94–+1.03% · other way -1.0% (n=12) |
| 6 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -0.7% hist -0.37–+0.07% · other way +0.18% (n=12) |
| 7 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -0.7% model prior · unmeasured |
| 8 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -7.33–+1.64% · other way +4.71% (n=12) |
| 9 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -0.6% hist -0.71–+0.84% · other way +5.56% (n=12) |
| 10 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -0.5% hist -0.53–+0.45% · other way +2.4% (n=12) |
| 11 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -0.79–+0.99% · other way +18.8% (n=12) |
| 12 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -1.22–+1.83% · other way +4.34% (n=12) |
| 13 | AMD AMDon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -0.23–-0.11% · other way -1.13% (n=12) |
| 14 | Broadcom AVGOon Hyperliquid 📈 chart | Equity | ▼ -0.4% hist -1.4–+2.96% · other way +1.14% (n=12) |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| XHB XHB | SHORT | -2.3% · 5d -1.4% | 75% | 40 | 0.42 | ✓ matches cascade |
| SOL SOL | SHORT | -7.1% · 5d -8.6% | 75% | 29 | 0.37 | ✓ matches cascade |
| MU MU | SHORT | -3.6% · 5d -0.9% | 67% | 40 | 0.27 | ✓ matches cascade |
| SPX SPX | LONG | +0.3% · 5d -0.4% ↺ fades | 63% | 40 | 0.26 | ⚠ differs |
| ETH ETH | SHORT | -6.2% · 5d -6.5% | 67% | 33 | 0.26 | ✓ matches cascade |
| ARM ARM | SHORT | -4.4% · 5d -5.2% | 68% | 20 | 0.25 | ✓ matches cascade |
| QCOM QCOM | SHORT | -3.3% · 5d -1.4% | 67% | 40 | 0.25 | ✓ matches cascade |
| Gold XAU | LONG | +2.1% · 5d +0.3% | 63% | 40 | 0.24 | ⚠ differs |
| AVGO AVGO | LONG | +3.0% · 5d -0.6% ↺ fades | 56% | 38 | 0.12 | ⚠ differs |
| AMD AMD | SHORT | -0.0% · 5d -0.2% | 58% | 40 | 0.11 | ✓ matches cascade |
| US dollar DXY | SHORT | -0.2% · 5d +0.1% ↺ fades | 56% | 40 | 0.09 | · |
| Bitcoin BTC | LONG | +1.1% · 5d -3.1% ↺ fades | 55% | 35 | 0.08 | ⚠ differs |
| SMH SMH | LONG | +0.7% · 5d +0.5% | 54% | 40 | 0.07 | ⚠ differs |
| MRVL MRVL | LONG | +2.1% · 5d -0.2% ↺ fades | 54% | 40 | 0.06 | ⚠ differs |