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 |
| 7.85% |
| 282.24 |
| 14.15% |
| 0.61 |
| 0.15 |
| -52.56% |
| 1.60 |
| 0.88 |
| -0.72 |
| 2.04 |
| 0.98 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 10.49% | 7.24% | 8.03% | 8.63% | 8.01% | 10.08% | 10.70% | 10.36% | 10.75% | 9.78% |
| 487.85 | 245.54 | 293.72 | 334.35 | 292.40 | 449.73 | 507.80 | 475.67 | 512.95 | 424.22 |
| 20.20% | 18.22% | 19.86% | 19.39% | 17.76% | 17.43% | 16.79% | 16.88% | 16.00% | 17.56% |
| 0.60 | 0.48 | 0.49 | 0.53 | 0.52 | 0.64 | 0.69 | 0.67 | 0.72 | 0.62 |
| 0.20 | 0.13 | 0.16 | 0.15 | 0.17 | 0.21 | 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% |
| 1.69 | 1.51 | 1.54 | 1.56 | 1.54 | 1.68 | 1.73 | 1.72 | 1.80 | 1.64 |
| 0.95 | 0.71 | 0.73 | 0.80 | 0.79 | 0.99 | 1.12 | 1.05 | 1.16 | 0.99 |
| 0.00 | -0.46 | -0.35 | -0.13 | -0.28 | -0.21 | -0.05 | -0.21 | -0.08 | 0.05 |
| 5.81 | 6.10 | 7.71 | 4.54 | 3.70 | 3.03 | 2.70 | 3.66 | 2.79 | 3.22 |
| 1.15 | 1.09 | 1.00 | 1.12 | 1.02 | 1.22 | 1.22 | 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 |
| 4.23% | 1.32% | 1.54% | 2.07% | 1.78% | 3.77% | 4.44% | 4.21% | 4.81% | 3.79% |
| 1.16 | 1.09 | 1.22 | 1.20 | 1.12 | 1.10 | 1.06 | 1.06 | 1.00 | 1.06 |
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