Equity index options often trade at implied volatilities that exceed the weighted implied volatility of their constituent stocks. This persistent gap reflects the market's pricing of correlation risk embedded in index derivatives. Dispersion trading strategies exploit this structural inefficiency by constructing portfolios that are short index volatility while long single-stock volatility, thereby isolating the implied correlation component. This paper develops a systematic dispersion trading framework and evaluates its performance across different volatility regimes. The research introduces a methodology for estimating implied correlation, constructing dispersion portfolios, and implementing volatility-targeted risk management.