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 |
| 7.94% |
| 349.52 |
| 14.50% |
| 0.60 |
| 0.15 |
| -52.56% |
| 1.58 |
| 0.88 |
| -0.62 |
| 1.62 |
| 0.96 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.23% | 7.89% | 8.83% | 9.43% | 8.24% | 9.64% | 9.92% | 10.68% | 10.36% | 8.96% |
| 711.67 | 345.54 | 427.90 | 488.07 | 374.49 | 510.63 | 542.51 | 635.45 | 595.44 | 440.80 |
| 20.76% | 18.15% | 19.67% | 19.02% | 17.63% | 17.33% | 16.89% | 16.97% | 16.28% | 17.65% |
| 0.62 | 0.51 | 0.53 | 0.57 | 0.54 | 0.62 | 0.65 | 0.69 | 0.69 | 0.58 |
| 0.21 | 0.14 | 0.17 | 0.17 | 0.18 | 0.20 | 0.20 | 0.21 | 0.23 | 0.21 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.72 | 1.55 | 1.59 | 1.62 | 1.55 | 1.65 | 1.66 | 1.72 | 1.74 | 1.57 |
| 1.02 | 0.77 | 0.80 | 0.88 | 0.82 | 0.96 | 1.03 | 1.08 | 1.09 | 0.91 |
| 0.23 | -0.42 | -0.33 | -0.11 | -0.25 | -0.18 | -0.05 | -0.21 | -0.12 | 0.03 |
| 5.09 | 5.59 | 7.29 | 4.52 | 3.44 | 2.77 | 2.28 | 3.14 | 2.33 | 2.75 |
| 1.31 | 1.17 | 1.03 | 1.13 | 1.03 | 1.26 | 1.13 | 1.15 | 1.14 | 1.15 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.08 |
| 5.23% | 2.15% | 2.62% | 3.18% | 2.25% | 3.59% | 3.89% | 4.65% | 4.54% | 3.17% |
| 1.14 | 1.07 | 1.18 | 1.16 | 1.09 | 1.08 | 1.06 | 1.05 | 1.01 | 1.05 |
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