The system and method for correlating, predicting and diagnosing system component performance data includes capturing knowledge about system behavior, deploying the captured knowledge as baseline system behavior files, evaluating system performance data against the baseline system behavior files, performing predictive and diagnostic analysis when received system performance data exceeds thresholds in the baseline system behavior files, and notifying a user when an analysis result is generated. The method of capturing knowledge about system behavior includes defining problems to be solved, creating datasets that correspond to defined problems, constructing problem scenarios, associating data patterns modules with the problem scenarios, and generating XML definition files that characterize system behavior in terms of the scenarios, modules, and datasets. The system has the capability to activate corrective scripts in the target system and to reconfigure the target system.