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 |
| 7.75% |
| 271.79 |
| 14.09% |
| 0.60 |
| 0.15 |
| -52.56% |
| 1.59 |
| 0.87 |
| -0.74 |
| 2.13 |
| 0.95 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 10.87% | 7.30% | 7.95% | 8.57% | 7.94% | 9.97% | 10.63% | 10.38% | 10.67% | 9.79% |
| 513.33 | 245.46 | 283.63 | 324.31 | 282.95 | 432.02 | 490.84 | 467.93 | 495.00 | 416.85 |
| 20.24% | 18.27% | 19.87% | 19.43% | 17.82% | 17.47% | 16.85% | 16.91% | 16.03% | 17.59% |
| 0.61 | 0.48 | 0.49 | 0.52 | 0.52 | 0.63 | 0.69 | 0.67 | 0.71 | 0.62 |
| 0.21 | 0.13 | 0.16 | 0.15 | 0.17 | 0.20 | 0.22 | 0.21 | 0.24 | 0.23 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.72 | 1.52 | 1.54 | 1.56 | 1.53 | 1.68 | 1.73 | 1.73 | 1.80 | 1.64 |
| 0.97 | 0.71 | 0.72 | 0.79 | 0.78 | 0.98 | 1.11 | 1.05 | 1.15 | 0.99 |
| -0.01 | -0.46 | -0.35 | -0.13 | -0.27 | -0.20 | -0.05 | -0.21 | -0.08 | 0.05 |
| 5.82 | 6.09 | 7.78 | 4.55 | 3.68 | 3.02 | 2.66 | 3.66 | 2.78 | 3.24 |
| 1.16 | 1.09 | 0.99 | 1.13 | 1.01 | 1.23 | 1.20 | 1.07 | 1.18 | 1.15 |
| -0.09 | -0.08 | -0.09 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 4.55% | 1.38% | 1.47% | 2.01% | 1.69% | 3.66% | 4.35% | 4.22% | 4.73% | 3.80% |
| 1.17 | 1.10 | 1.22 | 1.21 | 1.13 | 1.10 | 1.07 | 1.06 | 1.00 | 1.06 |
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