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Community-weighted mean (CWM) and functional diversity (FD) describe the two aspects of plant communities’ functional structure. While they have been often used separately to infer assembly processes, their covariation can actually provide useful insights into the prevalence of a particular assembly process over the other. We propose a framework where positive or negative covariation of these indices can be related to different assembly processes along an environmental gradient. We tested this framework in grassland communities along elevation gradient in Central Apennines by collecting species cover and traits of the most abundant species and calculating the effect size CWM and FD. We performed major axis regression for each effect size of CWM-FD relationship for different belts along the elevation gradient. The observation that Plant Height showed a positive CWM-FD relationship only under more stressful conditions indicates that there may be a tendency towards habitat filtering. Seed Mass showing positive covariation in each belt may indicate the presence of both habitat filtering and limiting similarity acting with different intensity depending on the environmental stress level. Negative covariation between CWM-Plant Height and Seed Mass-FD under less stress suggests biotic filter, while positive covariation between CWM-Plant Height and both Seed Mass and SLA FD under stressful conditions suggests the presence of habitat filtering. Ultimately, the relationship of CWM and FD may provide information on how different communities assemble along an environmental gradient. Moreover, combining the information of CWM with the FD and environmental stress level might help to identify the processes behind the same functional pattern.