Correlation Between SL Private and Third Point

Can any of the company-specific risk be diversified away by investing in both SL Private and Third Point at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SL Private and Third Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Private Equity and Third Point Investors, you can compare the effects of market volatilities on SL Private and Third Point and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SL Private with a short position of Third Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Private and Third Point.

Diversification Opportunities for SL Private and Third Point

0.12

Correlation Coefficient

SL Private  Third Point

Average diversification

The 3 months correlation between SLPE and Third is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding SL Private Equity and Third Point Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Point Investors and SL Private is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SL Private Equity are associated (or correlated) with Third Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Point Investors has no effect on the direction of SL Private i.e., SL Private and Third Point go up and down completely randomly.

Pair Corralation between SL Private and Third Point

Assuming the 90 days trading horizon SL Private Equity is expected to generate 0.77 times more return on investment than Third Point. However, SL Private Equity is 1.3 times less risky than Third Point. It trades about 0.01 of its potential returns per unit of risk. Third Point Investors is currently generating about -0.05 per unit of risk. If you would invest  54,300  in SL Private Equity on April 13, 2025 and sell it today you would earn a total of  0.00  from holding SL Private Equity or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SL Private Equity  vs.  Third Point Investors

SL Private Equity

Risk-Adjusted Performance

Weak

Over the last 90 days SL Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SL Private is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Third Point Investors

Risk-Adjusted Performance

Modest

Over the last 90 days Third Point Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Third Point is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SL Private and Third Point

The main advantage of trading using opposite SL Private and Third Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Private position performs unexpectedly, Third Point can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Third Point will offset losses from the drop in Third Point's long position.

The idea behind SL Private Equity and Third Point Investors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.