Correlation data portfolio diversification

How should I be thinking about and using correlation data between different assets in my portfolio? With three thousand I can only hold a few positions but I want to make sure I'm not accidentally creating concentration risk by holding things that move together.

Correlation data tells you how consistently two assets move in the same or opposite direction over time. High positive correlation between positions means they'll likely rise and fall together, providing less diversification benefit than their apparent variety suggests. For a small portfolio with three to five positions, checking pairwise correlations before adding any new position prevents the common mistake of thinking you're diversified when you're actually holding multiple expressions of the same underlying risk factor. Technology stocks, for example, often correlate highly with each other regardless of different business models, so holding several doesn't provide the diversification their different names imply.

Built what I thought was a diversified five-position portfolio only to discover during a market downturn that four of my five positions were highly correlated and moved almost identically downward. The apparent variety in company names and sectors obscured the underlying factor exposure they shared. After that experience I check correlation data specifically before adding any new position, asking whether it actually behaves differently from what I already own rather than just appearing different on the surface: https://555data.com/en/3kinvestment/