Four Red Flags and a Bear‑LowVol Regime Leave Cadre’s Stock on Edge

Why persistent drawdowns and benchmark lag raise questions about upside potential

CDRE Cadre Holdings, Inc.

In this report

01

Returns Overview

Period returns, alpha, cumulative performance, distributions

P. 2-3

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02

Volatility Analysis

Annualized volatility, downside deviation, drawdowns

P. 4-5

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03

Beta & Correlation

Trailing, upside, downside beta, systematic risk

P. 6-7

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04

Risk-Adjusted Returns

Sharpe, Sortino, Calmar, Information, Treynor

P. 8-9

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05

Market Regime Analysis

Bull/bear behavior, capture ratios

P. 10-11

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06

Investment Highlights & Risk Summary

Executive summary, risk flags, rankings

P. 12-13

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Returns Overview

Cadre Holdings, Inc. (CDRE) — Return Performance

Cadre Holdings, Inc. (CDRE) displayed a mixed return profile over the past three years, generating positive alpha versus its sector ETF in most periods but underperforming on an absolute basis. Over the last month the stock rose 7.33% while delivering an excess return of 8.15% over the sector and 11.02% relative to the broader market, yet over six months it fell 23.52%, lagging its sector by 30.70% and the market by 31.35%. The longer horizon shows a rebound, with a 35.1% total return in the three‑year window despite a negative three‑year alpha of -26.98% versus the sector.

Period Returns vs S&P 500 & XLI

Monthly Returns Heatmap

CDRE

The stock generated strong short‑term outperformance, posting positive one‑month and three‑month returns that exceeded both sector and market benchmarks by roughly 8–11%. However, the six‑month and one‑year periods revealed significant underperformance, with declines of -23.52% and -7.02% that trailed the sector by over 30%, indicating heightened downside risk in the near term. Over the three‑year span CDRE delivered a solid 35.1% gain, but its negative alpha (-26.98%) suggests the upside was driven more by broader market momentum than company‑specific strength.

Returns Overview

Cadre Holdings, Inc. (CDRE) — Return Charts

Volatility Analysis

Cadre Holdings, Inc. (CDRE) — Volatility Profile

Cadre Holdings (CDRE) exhibits markedly higher price variability than the broader market, with an annualized volatility of 45.97% compared to the S&P 500's 17.73%, indicating roughly 2.6 times greater dispersion in returns. The stock’s downside risk is pronounced: a downside deviation of 35.25% and a maximum drawdown of -40.76% over a single month (March‑April 2026) underscore vulnerability to sharp declines, with no recovery observed to date. Recent short‑term volatility remains elevated; the 60‑day vol of 52.69% exceeds both its 252‑day average of 49.16% and the long‑run level, suggesting that recent market conditions have intensified price swings.

Volatility Metrics

CDRE

The company’s volatility profile is substantially above benchmark, reflecting a riskier return stream for investors. Downside deviation of 35.25% signals that negative returns are more extreme than the overall volatility figure would imply, while the -40.76% max drawdown—occurring within a two‑month window and still unrecovered—highlights potential for deep, prolonged losses. The current 60‑day volatility (52.69%) sits above the trailing 252‑day average (49.16%), indicating that recent trading activity has been more erratic than typical for this stock.

CDRE's annualized volatility is 2.6x the S&P 500, pointing to a high‑risk price profile.
Downside deviation of 35.25% exceeds half of its total volatility, emphasizing asymmetric downside risk.
The maximum drawdown of -40.76% occurred over just 58 days and has not yet recovered.
Short‑term (60‑day) volatility is higher than the longer‑term (252‑day) average, suggesting a recent uptick in price turbulence.

Positive Characteristics
When CDRE does rally, its elevated volatility can produce outsized upside moves relative to the market.
The high beta environment may benefit risk‑tolerant investors seeking higher potential returns per unit of systematic risk.

Volatility Analysis

Cadre Holdings, Inc. (CDRE) — Volatility & Drawdown Charts

Beta & Correlation

Cadre Holdings, Inc. (CDRE) — Beta Profile

Cadre Holdings, Inc. (CDRE) exhibits a trailing beta of 0.892 relative to the S&P 500, placing it squarely in the market‑like range (0.8‑1.2). This indicates that the stock moves roughly in line with broad market movements but with slightly less sensitivity, offering modest defensive characteristics without being overly volatile. The upside beta of 0.695 versus a downside beta of 0.852 reveals an asymmetric risk profile: the share tends to rise less aggressively on market gains while falling more sharply during market declines, a pattern that risk‑averse investors should monitor closely. The low R-squared of 0.113 and correlation of 0.336 with the S&P 500 suggest that only about 11% of CDRE’s price variance is explained by overall market movements, leaving roughly 89% driven by idiosyncratic factors. This high idiosyncratic component (88.7%) implies that diversification benefits are significant; the stock does not closely track market trends and can add distinct risk‑return characteristics to a portfolio. When comparing its market beta to its sector beta of 0.985 against the Industrials index (XLI), CDRE’s exposure is almost entirely derived from sector dynamics, yet the modest sector R-squared of 0.146 indicates that even within its industry, most price action remains company‑specific.

Beta & Correlation Metrics

CDRE

The trailing market beta of 0.892 signals that CDRE behaves similarly to the broader market but with slightly reduced amplitude, fitting a market‑like risk profile rather than a defensive one. The pronounced downside beta (0.852) compared with upside beta (0.695) highlights greater vulnerability during market downturns, which could amplify losses in bearish regimes. With an R-squared of 11.3% and correlation of 0.336, the stock’s movements are largely independent of S&P 500 swings, underscoring a high idiosyncratic risk component that may be attractive for diversification but demands careful company‑specific analysis.

Trailing beta of 0.892 places CDRE in the market‑like range, offering modest sensitivity to overall equity moves.
Downside beta (0.852) exceeds upside beta (0.695), indicating asymmetric risk with greater downside exposure.
R-squared of 11.3% means only a small fraction of price variance is driven by market factors; the majority is idiosyncratic.
Systematic risk accounts for 11.3% of total variance, while idiosyncratic risk dominates at 88.7%, highlighting diversification potential.
Sector beta (0.985) is close to unity, but sector R-squared of 14.6% shows that most sector‑related movement is still limited, emphasizing company‑specific drivers.

Positive Characteristics
High idiosyncratic risk (88.7%) can enhance portfolio diversification by providing returns uncorrelated with market swings.
Sector beta near one indicates CDRE tracks industrial trends without excessive deviation, offering predictable exposure to sector dynamics.

Beta & Correlation

Cadre Holdings, Inc. (CDRE) — Rolling Beta

Positive Notes

High idiosyncratic risk (88.7%) can enhance portfolio diversification by providing returns uncorrelated with market swings.

Sector beta near one indicates CDRE tracks industrial trends without excessive deviation, offering predictable exposure to sector dynamics.

Risk-Adjusted Returns

Cadre Holdings, Inc. (CDRE) — Risk-Adjusted Performance

Cadre Holdings, Inc. (CDRE) delivers modest risk-adjusted returns relative to traditional benchmarks. A Sharpe ratio of 0.496 falls well below the 1.0 threshold that signals a favorable return per unit of total volatility, indicating that the stock’s excess return over the 3.63% risk‑free rate is limited when adjusted for overall risk. However, the Sortino ratio of 0.646 exceeds the Sharpe figure, suggesting that downside volatility is less pronounced than total volatility and that the equity has a relatively more favorable profile on the loss side.

Risk-free rate: 3.63% (Fed Funds Rate)

Risk-Adjusted Metrics

CDRE

Cadre’s Calmar ratio of 0.648 reflects a return-to-worst‑drawdown relationship that is modest; a higher value would imply that the firm can generate returns without severe drawdowns, but at 0.648 the equity has experienced notable peak‑to‑trough losses relative to its cumulative performance. The Information Ratio of 0.348, while positive, remains below the 0.5 benchmark for consistent alpha generation, indicating that any outperformance may be intermittent rather than reliably persistent. The Treynor ratio of 25.537 is unusually high, signifying strong return per unit of systematic (beta) risk; however, this figure must be interpreted with caution because it can be inflated by a low beta estimate rather than superior market timing.

Sharpe ratio below 1.0 signals underperformance on a total‑risk basis.
Sortino exceeds Sharpe, highlighting a comparatively milder downside volatility profile.
Calmar ratio under 1.0 points to drawdowns that have eroded a sizable share of returns.
Information Ratio below 0.5 suggests alpha generation is not consistently robust.
Elevated Treynor ratio indicates high excess return per unit of systematic risk, but may reflect low beta rather than skill.

Positive Characteristics
Sortino ratio above Sharpe demonstrates a relatively favorable downside risk characteristic.
Treynor ratio of 25.537 reflects strong compensation for market‑related risk exposure.

Risk-Adjusted Returns

Cadre Holdings, Inc. (CDRE) — Rolling Sharpe & Sortino

Positive Notes

Sortino ratio above Sharpe demonstrates a relatively favorable downside risk characteristic.

Treynor ratio of 25.537 reflects strong compensation for market‑related risk exposure.

Market Regime Analysis

Cadre Holdings, Inc. (CDRE) — Regime Behavior

Cadre Holdings, Inc. (CDRE) exhibits markedly different performance characteristics across market regimes, reflecting its sensitivity to both directional trends and volatility levels. In bullish environments the stock delivers robust monthly returns of roughly 2.3% regardless of volatility conditions, indicating strong participation in upward market moves. Conversely, during bearish periods the average return falls sharply to under 1% in a calm decline (Bear‑LowVol) and turns negative (-0.72%) when declines are volatile, highlighting vulnerability when markets fall rapidly.

Current Market Regime: Bear-LowVol

Bull-LowVol = calm uptrend • Bull-HighVol = volatile uptrend • Bear-LowVol = orderly decline • Bear-HighVol = crisis

Regime Returns & Capture Ratios

CDRE

In Bull‑LowVol and Bull‑HighVol regimes CDRE’s average monthly returns of 2.25% and 2.31% respectively suggest the business benefits from growth-oriented market sentiment, with only a marginal premium for higher volatility. In Bear‑LowVol the stock still manages a modest 0.89% gain per month, indicating some defensive qualities in orderly downturns; however, the performance deteriorates to a -0.72% monthly loss in Bear‑HighVol, reflecting heightened downside risk when market stress intensifies. The upside capture of 140.7% and downside capture of 135.4% yield a capture ratio of 1.04, meaning CDRE captures slightly more upside than downside on a relative basis, but the high downside capture tempers the attractiveness of that asymmetry.

Market Regime Analysis

Cadre Holdings, Inc. (CDRE) — Regime & Capture Charts

Regime Timeline

CDRE’s returns are consistently strong in bullish regimes (>2% monthly), regardless of volatility.
The stock retains modest positive performance in Bear‑LowVol (0.89% avg) but flips negative in Bear‑HighVol, indicating limited defensive resilience under stress.
Upside capture exceeds 140%, but downside capture is also elevated at 135.4%, producing a modest capture ratio of 1.04.
Current Bear‑LowVol regime suggests CDRE may deliver small positive returns, though upside potential is muted compared to bullish periods.

Positive Characteristics
Strong participation in market rallies with monthly gains above 2% in both low and high volatility bull markets.
Maintains a slight edge in upside versus downside capture (ratio >1.0), indicating marginally favorable asymmetry.

Investment Highlights & Risk Summary

Cadre Holdings, Inc. (CDRE) — Summary & Implications

Cadre Holdings, Inc. (CDRE) has delivered a 1‑year total return of -7.02%, trailing the S&P 500 by an alpha of -24.34% and underperforming its industrials peer group (ETF XLI) by -25.26%. The stock exhibits elevated risk characteristics, with annualized volatility of 45.97%—well above the market’s ~17%—and a maximum drawdown of -40.76%, indicating substantial capital loss potential in adverse market regimes. Despite these headwinds, CDRE shows an upside capture ratio of 140.7%, suggesting that it participates strongly in market rallies, while its downside capture of 135.4% and beta of 0.892 reflect a tendency to amplify losses when the broader market declines. Investors should weigh the asymmetric risk‑return profile: strong participation in upside moves is offset by pronounced vulnerability during downturns and a Sharpe ratio of only 0.496, which signals modest excess return per unit of risk.

Summary Dashboard

Investment Highlights

Upside capture of 140.7% indicates that CDRE participates more than proportionally in market gains, offering potential upside when industrials rally.
Beta of 0.892 suggests the stock moves slightly less than the overall market on a one‑to‑one basis, providing modest diversification benefit in stable environments.
Sortino ratio of 0.646 exceeds the Sharpe ratio, reflecting that downside volatility is somewhat contained relative to total volatility.

Risk-Return Rankings

CDRE ELEVATED

High volatility and deep drawdown combine with modest risk‑adjusted returns, yielding an elevated risk profile.

Strength: Strong upside capture (140.7%)

Concern: Deep maximum drawdown of -40.76% and high downside capture (135.4%)

Key Takeaways

The stock’s volatility (45.97%) is nearly three times the market, implying larger price swings.
A Sharpe ratio below 0.5 indicates limited compensation for the risk taken.
Downside capture exceeding 100% means losses are amplified relative to the broader market.
Sector underperformance of -25.26% suggests the business lags its industrial peers.

PORTFOLIO IMPLICATIONS

Given CDRE's elevated volatility and asymmetric downside exposure, it may be suited for a small allocation within a diversified portfolio that can tolerate significant drawdowns in exchange for higher participation during market rallies. Pairing CDRE with lower‑beta, low‑volatility assets could help smooth overall portfolio variance, while investors should monitor sector dynamics and maintain disciplined risk limits to manage potential capital erosion.

CDRE

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Report written 2026-07-31 • Finexus

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