A profitability trend is the evolution of profit within a business. An upward trend means that profit has generally increased over time in the short or long run. A downward profitability trend means profits are declining. Recognizing problems early in profitability trends gives you a better chance to address revenue and cost issues in play.
Profitability refers to a company's relative ability to generate a profit currently and into the future. However, a new business may not have yielded a quarterly profit, but it could have increasing profitability if its profit trend is improving.
On the contrary, an established business may have generated profit in a recent period, while its recent profitability trends call its future viability into question. In the long run, net profitability is vital to achieving for-profit business objectives. However, profit trends are often a strong sign as to big-picture profitability.
The demonstration of Profitability Trend performance shows the comparison of different quantile portfolios. Portfolios were rebalanced monthly using a market-cap weighted method, with 20 bps deducted as costs per transaction.
| Annual Return |
| Cumulative Return |
| Volatility |
| Sharpe ratio |
| Calmar ratio |
| Max Drawdown |
| Omega ratio |
| Sortino ratio |
| Skew |
| Kurtosis |
| Tail ratio |
| Monthly value at risk |
| Alpha |
| Beta |
| SPY |
| 7.64% |
| 336.40 |
| 14.76% |
| 0.58 |
| 0.15 |
| -52.56% |
| 1.55 |
| 0.84 |
| -0.61 |
| 1.42 |
| 0.93 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 10.74% | 7.55% | 8.63% | 9.24% | 8.03% | 9.27% | 9.79% | 10.39% | 9.84% | 8.88% |
| 669.96 | 328.84 | 423.77 | 485.73 | 368.99 | 488.47 | 547.77 | 621.59 | 553.69 | 447.92 |
| 20.88% | 18.38% | 19.86% | 19.10% | 17.78% | 17.48% | 17.10% | 17.09% | 16.53% | 17.84% |
| 0.59 | 0.49 | 0.52 | 0.56 | 0.53 | 0.60 | 0.63 | 0.67 | 0.65 | 0.57 |
| 0.20 | 0.14 | 0.17 | 0.16 | 0.17 | 0.19 | 0.20 | 0.21 | 0.22 | 0.21 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.68 | 1.51 | 1.57 | 1.60 | 1.52 | 1.61 | 1.64 | 1.69 | 1.69 | 1.56 |
| 0.97 | 0.73 | 0.78 | 0.86 | 0.80 | 0.92 | 1.01 | 1.04 | 1.02 | 0.90 |
| 0.21 | -0.43 | -0.32 | -0.12 | -0.25 | -0.20 | -0.05 | -0.21 | -0.14 | 0.02 |
| 4.87 | 5.17 | 6.85 | 4.33 | 3.19 | 2.60 | 2.06 | 2.94 | 2.10 | 2.51 |
| 1.28 | 1.06 | 0.99 | 1.09 | 0.98 | 1.23 | 1.14 | 1.12 | 1.08 | 1.17 |
| -0.09 | -0.08 | -0.09 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.08 |
| 5.21% | 2.20% | 2.87% | 3.46% | 2.46% | 3.64% | 4.15% | 4.78% | 4.41% | 3.46% |
| 1.14 | 1.08 | 1.18 | 1.15 | 1.09 | 1.07 | 1.06 | 1.05 | 1.01 | 1.05 |
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