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 |
| 8.84% |
| 389.59 |
| 14.15% |
| 0.67 |
| 0.17 |
| -52.56% |
| 1.68 |
| 0.99 |
| -0.67 |
| 2.01 |
| 1.00 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 12.09% | 8.16% | 9.29% | 9.87% | 8.89% | 10.59% | 11.17% | 11.50% | 11.37% | 10.26% |
| 750.48 | 335.13 | 429.36 | 484.02 | 394.09 | 560.63 | 628.61 | 669.73 | 653.36 | 524.67 |
| 20.73% | 18.03% | 19.65% | 19.17% | 17.53% | 17.18% | 16.63% | 16.73% | 15.81% | 17.37% |
| 0.66 | 0.53 | 0.55 | 0.59 | 0.58 | 0.67 | 0.72 | 0.74 | 0.76 | 0.65 |
| 0.23 | 0.15 | 0.18 | 0.17 | 0.19 | 0.22 | 0.23 | 0.23 | 0.25 | 0.24 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.79 | 1.58 | 1.63 | 1.65 | 1.60 | 1.73 | 1.78 | 1.81 | 1.86 | 1.68 |
| 1.09 | 0.79 | 0.84 | 0.91 | 0.88 | 1.06 | 1.18 | 1.17 | 1.23 | 1.04 |
| 0.21 | -0.44 | -0.33 | -0.12 | -0.27 | -0.20 | -0.05 | -0.23 | -0.11 | 0.03 |
| 5.42 | 6.10 | 7.71 | 4.62 | 3.78 | 3.11 | 2.69 | 3.62 | 2.81 | 3.20 |
| 1.31 | 1.12 | 1.04 | 1.19 | 1.05 | 1.25 | 1.26 | 1.11 | 1.21 | 1.16 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.06 | -0.07 |
| 4.98% | 1.49% | 1.97% | 2.46% | 1.92% | 3.57% | 4.19% | 4.55% | 4.74% | 3.54% |
| 1.17 | 1.09 | 1.21 | 1.20 | 1.11 | 1.09 | 1.06 | 1.06 | 0.99 | 1.05 |
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