CorrelationShockGuard
CorrelationShockGuard monitors the rolling pairwise return correlation of open positions and blocks new orders when the portfolio correlation exceeds
What it does
CorrelationShockGuard monitors the rolling pairwise return correlation of open positions and blocks new orders when the portfolio correlation exceeds the configured ceiling. It detects sudden hidden correlation shocks where previously independent markets begin resolving together, increasing tail risk beyond what the capital model assumes.
Pipeline placement
Applies to: Every OrderIntent — detects when the portfolio's supposedly independent positions are moving in lockstep, indicating a h
Why it matters
| If this fails | Consequence |
|---|---|
| Hidden correlation shock | Markets that appeared independent begin resolving together (e.g. macro shock, shared underlying fact), transforming the portfolio's diversification into concentrated tail risk with no warning. |
| New order added during correlation spike | Adding a new position while portfolio correlation is elevated amplifies the shock exposure instead of providing diversification. |
Inputs
Polymarket inputs
| Input | Source | Required | Use |
|---|---|---|---|
| Market price series for all open positions | data_api | required | Compute rolling pairwise correlations across positions over a configurable lookback window. |
| Market category and topic tags | gamma | optional | Group markets by topic to detect within-group correlation that may indicate shared resolution events. |
Internal inputs
| Input | Source | Required | Use |
|---|---|---|---|
| Current open position list and notional values | internal | required | Identify which markets to include in the correlation calculation. |
| KillSwitch active flag | KillSwitch | required | If active, reject immediately. |
Authority
What this bot is permitted to do
State
Readiness
Planned
Status
planned
Class
Guardrail
Default mode
planned
Developer owner
Polytraders core — Risk pod
Capital impact
Direct
Reason codes emitted
| Code | Severity | Meaning | Action |
|---|---|---|---|
| KILL_SWITCH_ACTIVE | HARD_REJECT | Global kill switch active. | Immediate HARD_REJECT. |
| CORRELATION_SHOCK_DETECTED | HARD_REJECT | Portfolio average pairwise correlation exceeds the hard ceiling. | HARD_REJECT; log avg_corr, num_positions, and lookback_periods. |
| CORRELATION_SHOCK_APPROACHING | WARN | Portfolio correlation is between the warning and hard thresholds. | Attach WARN annotation to APPROVE; do not block. |
| CORRELATION_SHOCK_DATA_UNAVAILABLE | HARD_REJECT | Price series data unavailable for one or more positions. | HARD_REJECT (fail-closed). |
Related bots in Risk Guardrail
Used by
Reverse index — strategies that currently reference risk.correlationshockguard. If you change this bot's authority or reason codes, these strategies must re-pass shadow.
| Strategy | State | Activity |
|---|---|---|
| NBA props — line-shop | demo-wired | last triggered 45m ago |
Showing 1 of 1 · demo-wired ≠ production-live
Why this matters
Risk Guardrail bots does NOT propose intents or sign orders; only permits or blocks. Understanding the authority boundary prevents misuse and makes promotion-gate reviews faster and more reliable. View raw spec JSON →