Under TF models, where we get it right is with our asymmetrical design, but where we can get it wrong is in our assumption of stationarity with respect to methods of diversification using correlation as our ruler. This can leave us over-exposed at times to adverse leverage.

Design solutions in diversified system application of trend following models is a way around this problem. We can defend against a moving feast of the market correlations using a co-integrated robust risk fortress.

A perfect hedge is an example of a 100% static cointegrated relationship in a market that can be non-stationary. We as TF's must allow for risk release but in many small bites, which we do by cutting losses short....but we can use principles of co-integration to do this.

We can exercise a greater degree of control in our drawdown through this deliberate design method and buy us greater time for the ultimate eventuality of a positive outlier in a fat tailed environment.