Sector concentration, and portfolio heat

The commodities track counted clusters because its diversification was fake. Equities earns the honest version of the lesson: real diversification exists here - and the failure mode is thinking you have it when you have a sector.

Both halves of the truth

• Diversification is real: names from genuinely different sectors carry different businesses, different customers, different fates - a spread of them meaningfully dampens single-name risk, which module 1's decomposition predicts and the data confirms.
• Sectors are clusters with plumbing: five banks are one interest-rate bet; five chip names are one cycle - module 1's sector layer moving them together, exactly as the commodity clusters' shared barrel did.
• The market layer floors everything: in a genuine crash, correlations converge and the market layer swamps the rest - diversification dampens ordinary days and thins out in the worst ones, and honest planning uses the crash number.

Heat, and the two ledgers

Portfolio heat is the platform's standing sum - every position's distance-to-stop risk, added up - and equities reads it twice: total heat against the account's tolerance, and heat by sector against the cluster budgets. A book showing eight positions and 8% total heat reads prudent; the same book showing 6% of that heat in one sector reads as what it is - a leveraged sector view with decorations. Module 2's ratio charts tell you which sector each name actually answers to; the plan assigns each sector its ceiling; and the earnings season adds the equity twist: heat spikes when several held names report in the same week, which the calendar shows in advance.

The cap family completed

The equity risk plan now carries three ceilings: per-name (lesson 6, the halving), per-sector (this lesson, the cluster), and total heat (the account's survivable worst week). Each answers a different catastrophe, none substitutes for another, and all three are checked at entry - the two-constraint rule of lesson 2, grown to its full size. What remains is the wrapper's own machinery, next lesson, and the page that holds it all, last.