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 |
| 5.20% |
| 132.86 |
| 13.84% |
| 0.44 |
| 0.10 |
| -50.83% |
| 1.42 |
| 0.63 |
| -0.46 |
| 2.63 |
| 0.99 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.02% | 8.46% | 8.72% | 9.36% | 7.56% | 9.57% | 10.16% | 9.49% | 10.02% | 9.05% |
| 471.42 | 286.98 | 302.83 | 344.16 | 236.95 | 358.41 | 401.73 | 353.00 | 391.45 | 323.83 |
| 18.23% | 16.31% | 17.19% | 18.21% | 16.56% | 16.15% | 15.71% | 15.86% | 14.95% | 15.94% |
| 0.67 | 0.58 | 0.57 | 0.58 | 0.52 | 0.65 | 0.70 | 0.65 | 0.72 | 0.62 |
| 0.21 | 0.15 | 0.17 | 0.17 | 0.16 | 0.20 | 0.20 | 0.19 | 0.22 | 0.22 |
| -52.63% | -55.09% | -50.24% | -55.35% | -47.36% | -48.54% | -49.66% | -50.62% | -44.82% | -41.51% |
| 1.75 | 1.62 | 1.61 | 1.63 | 1.52 | 1.68 | 1.72 | 1.69 | 1.78 | 1.62 |
| 1.09 | 0.90 | 0.89 | 0.92 | 0.80 | 1.01 | 1.13 | 1.02 | 1.13 | 1.00 |
| 0.09 | -0.20 | 0.01 | 0.10 | -0.23 | -0.16 | -0.05 | -0.27 | -0.23 | 0.04 |
| 3.80 | 4.20 | 3.88 | 4.74 | 3.00 | 2.89 | 1.88 | 3.63 | 2.39 | 2.30 |
| 1.25 | 1.09 | 1.06 | 1.07 | 0.97 | 1.18 | 1.26 | 1.09 | 0.99 | 1.05 |
| -0.08 | -0.07 | -0.07 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.06 | -0.07 |
| 5.44% | 3.15% | 2.95% | 3.24% | 1.89% | 3.85% | 4.42% | 3.87% | 4.62% | 3.79% |
| 1.11 | 1.05 | 1.14 | 1.22 | 1.12 | 1.10 | 1.08 | 1.07 | 1.01 | 1.02 |
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