Five Red Flags Loom Over PWP’s Historic Drawdowns

Why the firm’s persistent under‑performance and bull‑high‑vol regime raise caution for investors

PWP Perella Weinberg Partners

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

Perella Weinberg Partners (PWP) — Return Performance

Perella Weinberg Partners (PWP) has delivered mixed returns across the observed horizons, with a pronounced long‑term upside but recent short‑term weakness. Over the past three years the stock posted a robust 93.26% total return, outpacing its sector benchmark by 27.35 percentage points, while the one‑year performance lagged at -20.04%, underperforming the sector by 39.04%. The most recent month and quarter were negative (-9.42% and -14.76%) with alpha of -6.83% and -27.86% respectively, indicating that short‑term price action has been dominated by broader market pressures rather than company‑specific drivers.

Period Returns vs S&P 500 & XLF

Monthly Returns Heatmap

PWP

The stock generated meaningful sector‑adjusted alpha over the 3‑year horizon (+27.35%) and a respectable 5‑year return of 32.88% despite a modest underperformance to the sector (-21.27%). However, recent 1‑month and 3‑month periods show negative absolute returns and substantial negative alpha, suggesting short‑term downside risk that diverges sharply from its longer‑term outperformance.

Returns Overview

Perella Weinberg Partners (PWP) — Return Charts

Volatility Analysis

Perella Weinberg Partners (PWP) — Volatility Profile

Perella Weinberg Partners exhibits markedly higher price variability than the broader market, with an annualized volatility of 41.02% compared to the S&P 500’s 17.78%, indicating more than double the typical daily price swings. The firm’s downside risk profile is pronounced: a downside deviation of 26.67% and a max drawdown of -60.46% over roughly ten months (September 2021 to July 2022) highlight substantial loss potential during adverse market regimes, with a recovery period extending into early 2024. Recent short‑term volatility remains elevated; the 60‑day vol of 47.85% and 252‑day vol of 43.62% both sit above the long‑term average of 41.02%, suggesting that price swings have intensified in the current environment.

Volatility Metrics

PWP

The company’s volatility is more than twice that of the S&P 500, reflecting a riskier equity profile that may deter risk‑averse investors. Downside metrics reinforce this view: a downside deviation of 26.67% exceeds the total annualized vol and the -60.46% max drawdown demonstrates deep, prolonged loss exposure, with the trough lasting nearly ten months before any meaningful recovery. Short‑term volatility measures—47.85% over 60 days and 43.62% over 252 days—are both higher than the long‑run average, indicating that recent market stress has amplified price fluctuations beyond historical norms.

Annualized volatility of PWP is 41.02%, more than double the S&P 500’s 17.78%.
Downside deviation stands at 26.67%, underscoring heightened sensitivity to negative returns.
Max drawdown of -60.46% persisted for roughly ten months, revealing significant tail risk.
Both 60‑day (47.85%) and 252‑day (43.62%) volatilities exceed the long‑term average, pointing to a recent uptick in price turbulence.

Positive Characteristics
Despite elevated volatility, the stock has fully recovered from its deepest drawdown as of February 2024, indicating resilience.
Higher volatility can provide larger upside potential for investors with higher risk tolerance.

Volatility Analysis

Perella Weinberg Partners (PWP) — Volatility & Drawdown Charts

Beta & Correlation

Perella Weinberg Partners (PWP) — Beta Profile

Perella Weinberg Partners exhibits a trailing beta of 1.235 versus the S&P 500, placing it in the aggressive category (>1.2) and indicating that its equity price tends to amplify broad market moves. The upside beta of 1.21 is modestly lower than the downside beta of 1.473, revealing an asymmetry where the stock is more sensitive to market declines than to rallies—a salient point for risk‑averse investors. An R-squared of 25.1% signals that roughly one quarter of PWP’s price variance is explained by systematic factors, while the remaining 74.9% stems from idiosyncratic drivers, suggesting limited diversification benefit from a pure market exposure perspective.

Beta & Correlation Metrics

PWP

The market beta of 1.235 confirms that PWP’s equity is expected to move about 23.5% more than the S&P 500 on average, reinforcing its aggressive risk profile. However, the sector beta of 1.114 versus XLF indicates that only a portion of this sensitivity originates from financial‑services dynamics; the remaining excess beta reflects company‑specific factors. The correlation of 0.501 with the market and 0.508 with the sector aligns closely with these betas, underscoring that half of PWP’s returns move in tandem with broader equity trends while the other half are driven by unique elements.

Trailing beta of 1.235 classifies PWP as aggressive relative to the broad market.
Downside beta (1.473) exceeds upside beta (1.21), implying heightened vulnerability in market downturns.
R-squared of 25.1% indicates that most price movement is idiosyncratic, limiting diversification benefits from market exposure alone.
Sector beta of 1.114 shows that roughly 90% (1.114/1.235) of the systematic risk stems from financial‑services sector movements.
Correlation with both the S&P 500 (0.501) and XLF (0.508) reflects moderate alignment, confirming mixed sources of return variance.

Positive Characteristics
Sector beta below market beta suggests that a portion of PWP’s risk can be mitigated by sector‑focused hedging strategies.
Moderate correlation values imply the stock does not move in lockstep with the market, offering potential for tactical positioning.

Beta & Correlation

Perella Weinberg Partners (PWP) — Rolling Beta

Positive Notes

Sector beta below market beta suggests that a portion of PWP’s risk can be mitigated by sector‑focused hedging strategies.

Moderate correlation values imply the stock does not move in lockstep with the market, offering potential for tactical positioning.

Risk-Adjusted Returns

Perella Weinberg Partners (PWP) — Risk-Adjusted Performance

Perella Weinberg Partners (PWP) delivers modest risk‑adjusted returns as reflected by its Sharpe ratio of 0.358, well below the benchmark threshold of 1.0 that signals strong excess return per unit of total volatility. The Sortino ratio of 0.551 exceeds the Sharpe figure, indicating that the firm’s downside volatility is lower than its overall volatility and that a larger share of its returns comes from periods of positive performance. However, other risk‑adjusted metrics such as the Calmar (0.303) and Information (0.103) ratios suggest limited resilience to drawdowns and only marginal alpha generation relative to a benchmark.

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

Risk-Adjusted Metrics

PWP

The Sharpe ratio of 0.358 signals that PWP’s excess return over the risk‑free rate is modest when adjusted for total volatility, implying limited compensation for investors bearing market risk. The higher Sortino ratio (0.551) reveals a relatively favorable downside profile; the firm experiences less harmful volatility than its overall risk measure would suggest, which can be attractive to risk‑averse investors. Nonetheless, the Calmar ratio of 0.303 points to a pronounced sensitivity to peak‑to‑trough losses, meaning that historical drawdowns have eroded a substantial portion of returns. The Information ratio of 0.103 falls far short of the 0.5 benchmark for consistent alpha generation, indicating that active management has contributed only minimal excess performance over a passive reference.

Sharpe ratio well below 1.0 denotes modest total risk‑adjusted return.
Sortino exceeds Sharpe, highlighting lower downside volatility relative to overall volatility.
Calmar ratio of 0.303 suggests significant drawdown impact on returns.
Information ratio of 0.103 indicates weak consistent alpha generation.
Treynor ratio of 11.893 reflects high return per unit of systematic risk but must be interpreted alongside low total‑risk metrics.

Positive Characteristics
Sortino ratio above Sharpe points to a comparatively benign downside risk profile.
High Treynor ratio shows strong compensation for market (beta) exposure.

Risk-Adjusted Returns

Perella Weinberg Partners (PWP) — Rolling Sharpe & Sortino

Positive Notes

Sortino ratio above Sharpe points to a comparatively benign downside risk profile.

High Treynor ratio shows strong compensation for market (beta) exposure.

Market Regime Analysis

Perella Weinberg Partners (PWP) — Regime Behavior

Perella Weinberg Partners (PWP) exhibits pronounced sensitivity to market volatility regimes, delivering its strongest returns during Bull-HighVol periods where the S&P 500 is above its 50‑day SMA yet realized volatility exceeds the median. In that environment the firm generates an average monthly return of 4.86% over 22 months, substantially higher than the 3.0% achieved in calmer Bull-LowVol markets. Conversely, PWP’s performance deteriorates sharply when the market turns bearish; during Bear‑LowVol it records a modest –3.24% loss (based on only one month of data), while in Bear‑HighVol the average decline deepens to –5.6% over 16 months. The firm’s upside capture of 148.4% indicates that it outperforms the broader market during uptrends, but a downside capture of 168.7% reveals even greater sensitivity to declines, yielding an overall capture ratio of 0.88.

Current Market Regime: Bull-HighVol

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

Regime Returns & Capture Ratios

PWP

In Bull‑HighVol regimes PWP thrives, reflecting its business model’s reliance on heightened deal activity and elevated advisory fees that accompany volatile equity markets. The firm’s modest upside capture advantage diminishes in Bull‑LowVol conditions, where lower transaction volumes temper earnings growth. During bear phases the high downside capture signals vulnerability; the firm’s revenue streams are more exposed to market stress, leading to steeper losses especially when volatility spikes. Investors should therefore view PWP as a cyclical name that benefits from turbulent upward markets but lacks defensive characteristics in downturns.

Market Regime Analysis

Perella Weinberg Partners (PWP) — Regime & Capture Charts

Regime Timeline

PWP delivers its highest average monthly return (4.86%) during Bull‑HighVol, outperforming its Bull‑LowVol return (3.0%).
Downside capture of 168.7% means the stock loses more than the market in bear regimes, contributing to a sub‑unity capture ratio (0.88).
The firm is not defensive; it experiences larger losses in Bear‑HighVol (-5.6%) than in Bull‑LowVol (+3.0%).
Current Bull‑HighVol environment aligns with PWP’s strongest historical performance, suggesting near‑term upside potential.
Limited data for Bear‑LowVol (only one month) cautions against over‑interpreting that specific figure.

Positive Characteristics
Strong upside capture of 148.4% indicates the ability to exceed market gains when equities rise.
Robust performance in volatile uptrends aligns with higher advisory fee generation during periods of increased M&A activity.

Investment Highlights & Risk Summary

Perella Weinberg Partners (PWP) — Summary & Implications

Perella Weinberg Partners delivered a 1‑year return of -20.04% and lagged the S&P 500 by 39.04 basis points, reflecting substantial underperformance relative to both broad market and its sector (XLF). The firm’s risk profile is marked by an annualized volatility of 41.02%, a maximum drawdown of -60.46%, and a beta of 1.235, indicating amplified exposure to market swings and a history of deep capital losses. Despite an upside capture of 148.4%, the downside capture of 168.7% reveals that the stock magnifies market declines, resulting in a low Sharpe ratio of 0.358 and modest risk‑adjusted returns. Investors should weigh these heightened risk characteristics against any potential upside, recognizing that the current metrics suggest limited reward for the level of risk taken.

Summary Dashboard

Investment Highlights

Upside capture of 148.4% shows the stock can participate strongly in market rallies when they occur.
Beta of 1.235 indicates a higher sensitivity to market movements, which could benefit from a sustained equity bull market.
The firm’s exposure to high‑net‑worth advisory work provides a niche revenue stream that may be less cyclical than broader banking activities.

Risk-Return Rankings

PWP HIGH

High volatility and deep drawdown dominate the risk profile, offsetting modest upside capture.

Strength: Upside capture of 148.4% in rising markets

Concern: Maximum drawdown of -60.46% and downside capture of 168.7%

Key Takeaways

The stock’s Sharpe ratio of 0.358 signals modest excess return per unit of risk.
Downside capture far exceeds upside capture, indicating asymmetric risk that amplifies losses more than gains.
Sector underperformance of -20.6% versus XLF highlights relative weakness within financial services.
High volatility (41.02%) and beta (1.235) suggest the stock will move sharply with market swings.

PORTFOLIO IMPLICATIONS

Given its high volatility and pronounced downside bias, Perella Weinberg Partners is best suited for a small allocation within an aggressive growth portfolio that can tolerate large drawdowns. Its strong upside capture may complement defensive holdings, but investors should monitor sector trends and be prepared for further capital erosion during market downturns.

PWP

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Report written 2026-06-07 • Finexus

Disclaimer

This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

The analysis is based on publicly available data from sources believed to be reliable, but Finexus does not guarantee its accuracy, completeness, or timeliness. Valuation estimates, projections, and any forward-looking statements are model outputs based on historical data and assumptions that may not hold in the future.

Past performance is not indicative of future results. Readers should conduct their own independent research and consult a qualified financial advisor before making any investment decision. Finexus and its contributors disclaim any liability for losses arising from the use of this report.