  We investigate the influence of spatial disorder correlations on smeared
phase transitions, taking the quantum phase transition in itinerant magnets as
an example. We find that even short-range correlations can have a dramatic
effect and qualitatively change the behavior of observable quantities. This is
in marked contrast to conventional critical phenomena, at which short-range
disorder correlations are irrelevant. We develop an optimal fluctuation theory
of the quantum phase transition in the presence of correlated disorder, and we
illustrate the results by computer simulations. As an experimental application,
we discuss the ferromagnetic quantum phase transition in
Sr$_{1-x}$Ca$_x$RuO$_3$.
