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 |
| 7.31% |
| 235.78 |
| 13.51% |
| 0.59 |
| 0.14 |
| -52.56% |
| 1.57 |
| 0.85 |
| -0.80 |
| 2.09 |
| 0.96 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 10.86% | 7.79% | 8.30% | 8.47% | 7.55% | 9.45% | 10.06% | 9.54% | 9.66% | 9.01% |
| 486.92 | 262.40 | 292.95 | 304.01 | 248.65 | 371.33 | 418.19 | 377.66 | 387.23 | 339.43 |
| 18.19% | 16.37% | 17.27% | 18.20% | 16.44% | 16.31% | 15.66% | 15.79% | 14.89% | 16.13% |
| 0.66 | 0.54 | 0.55 | 0.54 | 0.53 | 0.64 | 0.69 | 0.66 | 0.70 | 0.62 |
| 0.21 | 0.14 | 0.16 | 0.15 | 0.16 | 0.19 | 0.21 | 0.19 | 0.21 | 0.21 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.74 | 1.56 | 1.58 | 1.57 | 1.52 | 1.66 | 1.71 | 1.69 | 1.75 | 1.61 |
| 1.07 | 0.82 | 0.84 | 0.83 | 0.80 | 0.99 | 1.12 | 1.02 | 1.10 | 0.98 |
| 0.05 | -0.28 | -0.03 | 0.07 | -0.26 | -0.17 | -0.05 | -0.31 | -0.23 | -0.03 |
| 3.75 | 3.92 | 3.87 | 4.52 | 2.92 | 2.65 | 1.96 | 3.51 | 2.39 | 2.20 |
| 1.12 | 1.10 | 0.96 | 1.00 | 1.01 | 1.18 | 1.24 | 1.05 | 0.98 | 1.04 |
| -0.08 | -0.07 | -0.07 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.06 | -0.07 |
| 5.39% | 2.57% | 2.66% | 2.53% | 2.00% | 3.80% | 4.44% | 4.05% | 4.41% | 3.80% |
| 1.11 | 1.05 | 1.14 | 1.22 | 1.11 | 1.10 | 1.07 | 1.06 | 1.00 | 1.03 |
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