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AI agent for portfolio managers

Portfolio Correlation and Exposure Agent

Exposure that is inside the trader's limits, with a proposed fix when it is not

Risk managementDecisionsFinance
See how it worksGet access
Portfolio Correlation and Exposure Agent: what goes in, what the agent does and what you get

What it does

Five positions can look like five bets and behave like one. This agent reads the trader's open positions and calculates correlation between them and overlap in sector or factor exposure. It adds up the combined exposure and compares it with the trader's limits for single names, sectors and total portfolio risk. If a limit is breached, it tests which reductions fix the problem at the least cost, such as trimming the weakest position or the one with the smallest gain, and recalculates after each test. It checks that the proposed fix actually brings every limit back inside. The trader approves any change before an order is placed. Edge case: two positions that are uncorrelated in calm markets but move together in sell-offs are checked using stress periods too.

How it works

Follow the arrows from top to bottom. The orange dashed arrow is the loop: when a check fails, the agent goes back and tries again.

Start and resultWhat it doesA check on its own workWaits for your OKGoes back and retries
Yes, continueYes, continueApprovedNoNo 1 STARTS WHEN Market closes or a position is added 2 USES A TOOL Read open positions and price history 3 DOES Calculate pairwise correlation and sector or factoroverlap 4 DOES Add combined exposure and compare to each limit 5 CHECKS THE RESULT Is every limit respected? If not: list the breaches and test reductions that wouldfix them. Back to step 3. 6 USES A TOOL Recalculate exposure for each proposed reduction 7 CHECKS THE RESULT Does the proposal bring all limits back inside? If not: try a different combination or a larger trim andrecalculate. Back to step 6. 8 DOES Rerun using stress-period correlations 9 YOU APPROVE Trader approves any trade before an order is placed 10 RESULT Exposure report and approved action list
Read the steps as a list
  1. Market closes or a position is added
  2. Read open positions and price history
  3. Calculate pairwise correlation and sector or factor overlap
  4. Add combined exposure and compare to each limit
  5. Is every limit respected?If not: list the breaches and test reductions that would fix them. Back to step 3.
  6. Recalculate exposure for each proposed reduction
  7. Does the proposal bring all limits back inside?If not: try a different combination or a larger trim and recalculate. Back to step 6.
  8. Rerun using stress-period correlations
  9. Trader approves any trade before an order is placedThe agent waits here for your OK.
  10. Exposure report and approved action list

How it decides

A breach is any limit exceeded. Among fixes that restore the limits, it prefers the one that gives up the least expected gain and the fewest trades.

  • Treat pairs with correlation above 0.7 as one position for limit purposes
  • Breach when one sector exceeds 30% of portfolio risk
  • Prefer trimming the position with the smallest unrealized gain
  • Recheck using stress-period correlations before accepting the fix

Make it yours

Every agent is a starting point. You choose these settings for your own situation.

  • Exposure limits by name, sector and total
  • Correlation threshold (default 0.7)
  • Look-back window for correlation (default 90 days)
  • Report schedule

What keeps you in control

It always asks you first

  • Any order to reduce positions

Hard limits

  • Never places orders
  • Never changes the trader's limits

It stops when

  • Done: all limits are inside and the report is saved
  • Stop: position data is stale

Set it up

We guide you through the set-up, step by step

Members get the full set-up guide for this agent. No technical skills needed: you copy, paste and upload.

10 minto set it up in your AI
5 AIsChatGPT, Claude, Copilot, Gemini, Grok
  • One set of instructions to paste into your AI, with the clicks for ChatGPT, Claude, Microsoft 365 Copilot, Gemini and Grok
  • The agent then walks you through connecting your own data, one source at a time
  • A downloadable copy with the flow chart, the rules and the full guide
Get access to this agent

An example run

What happensA trader held 6 positions: four tech names and two semiconductors, together 58% of risk against a 40% sector limit. The check failed. The agent tested trimming the two smallest gains, which left 44%, still over. A second test trimming three positions brought it to 37%. A stress check kept it under 40%. The trader approved selling half of two positions.

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