Correlation Between Third Point and SL Private

Can any of the company-specific risk be diversified away by investing in both Third Point and SL Private 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 Third Point and SL Private into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Third Point Investors and SL Private Equity, you can compare the effects of market volatilities on Third Point and SL Private 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 Third Point with a short position of SL Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Point and SL Private.

Diversification Opportunities for Third Point and SL Private

-0.43

Correlation Coefficient

Third Point  SL Private

Very good diversification

The 3 months correlation between Third and SLPE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Third Point Investors and SL Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Private Equity and Third Point 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 Third Point Investors are associated (or correlated) with SL Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Private Equity has no effect on the direction of Third Point i.e., Third Point and SL Private go up and down completely randomly.

Pair Corralation between Third Point and SL Private

Assuming the 90 days trading horizon Third Point Investors is expected to generate 1.51 times more return on investment than SL Private. However, Third Point is 1.51 times more volatile than SL Private Equity. It trades about 0.01 of its potential returns per unit of risk. SL Private Equity is currently generating about -0.04 per unit of risk. If you would invest  181,500  in Third Point Investors on May 27, 2025 and sell it today you would lose (250.00) from holding Third Point Investors or give up 0.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Third Point Investors  vs.  SL Private Equity

Third Point Investors

Risk-Adjusted Performance

Weakest

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

SL Private Equity

Risk-Adjusted Performance

Weakest

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Third Point and SL Private

The main advantage of trading using opposite Third Point and SL Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Point position performs unexpectedly, SL Private 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 SL Private will offset losses from the drop in SL Private's long position.

The idea behind Third Point Investors and SL Private Equity 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.