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 |
| 7.55% |
| 238.34 |
| 13.46% |
| 0.61 |
| 0.14 |
| -52.56% |
| 1.60 |
| 0.89 |
| -0.78 |
| 2.16 |
| 1.00 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.21% | 8.69% | 8.85% | 9.62% | 7.95% | 9.84% | 10.54% | 10.05% | 10.37% | 9.57% |
| 497.92 | 306.54 | 316.55 | 369.58 | 262.34 | 385.65 | 440.01 | 401.11 | 426.14 | 365.70 |
| 18.15% | 16.25% | 17.13% | 18.13% | 16.50% | 16.11% | 15.65% | 15.84% | 14.90% | 15.92% |
| 0.68 | 0.60 | 0.58 | 0.60 | 0.55 | 0.67 | 0.72 | 0.69 | 0.74 | 0.66 |
| 0.21 | 0.16 | 0.18 | 0.17 | 0.17 | 0.20 | 0.21 | 0.20 | 0.23 | 0.23 |
| -52.63% | -55.09% | -50.24% | -55.35% | -47.36% | -48.54% | -49.66% | -50.62% | -44.82% | -41.51% |
| 1.77 | 1.64 | 1.62 | 1.65 | 1.54 | 1.70 | 1.75 | 1.73 | 1.81 | 1.66 |
| 1.11 | 0.93 | 0.91 | 0.94 | 0.84 | 1.04 | 1.18 | 1.08 | 1.17 | 1.05 |
| 0.08 | -0.21 | 0.01 | 0.09 | -0.24 | -0.17 | -0.07 | -0.29 | -0.25 | 0.02 |
| 3.85 | 4.25 | 3.91 | 4.80 | 3.05 | 2.88 | 1.91 | 3.61 | 2.41 | 2.28 |
| 1.26 | 1.09 | 1.06 | 1.07 | 0.99 | 1.18 | 1.26 | 1.09 | 0.98 | 1.04 |
| -0.08 | -0.07 | -0.07 | -0.08 | -0.07 | -0.07 | -0.06 | -0.07 | -0.06 | -0.07 |
| 5.29% | 3.07% | 2.75% | 3.15% | 1.93% | 3.78% | 4.45% | 4.07% | 4.64% | 3.97% |
| 1.11 | 1.05 | 1.14 | 1.22 | 1.12 | 1.10 | 1.08 | 1.07 | 1.01 | 1.02 |
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