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 |
| 8.61% |
| 351.56 |
| 14.22% |
| 0.65 |
| 0.16 |
| -52.56% |
| 1.66 |
| 0.97 |
| -0.67 |
| 2.01 |
| 0.99 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 12.73% | 8.30% | 9.50% | 9.75% | 9.09% | 10.73% | 11.35% | 11.33% | 11.25% | 10.16% |
| 790.53 | 328.43 | 423.69 | 446.53 | 389.61 | 542.58 | 611.46 | 608.84 | 600.34 | 485.02 |
| 20.90% | 18.23% | 19.87% | 19.38% | 17.73% | 17.36% | 16.74% | 16.82% | 15.90% | 17.45% |
| 0.68 | 0.53 | 0.56 | 0.58 | 0.58 | 0.68 | 0.73 | 0.72 | 0.75 | 0.64 |
| 0.24 | 0.15 | 0.19 | 0.17 | 0.20 | 0.22 | 0.23 | 0.23 | 0.25 | 0.24 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.83 | 1.58 | 1.64 | 1.64 | 1.61 | 1.73 | 1.79 | 1.80 | 1.85 | 1.67 |
| 1.13 | 0.80 | 0.85 | 0.89 | 0.89 | 1.06 | 1.19 | 1.15 | 1.22 | 1.04 |
| 0.20 | -0.44 | -0.34 | -0.12 | -0.28 | -0.20 | -0.05 | -0.22 | -0.09 | 0.05 |
| 5.35 | 5.96 | 7.54 | 4.48 | 3.66 | 3.02 | 2.66 | 3.62 | 2.80 | 3.22 |
| 1.29 | 1.13 | 1.03 | 1.22 | 1.04 | 1.25 | 1.28 | 1.11 | 1.18 | 1.17 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 5.67% | 1.79% | 2.33% | 2.53% | 2.27% | 3.86% | 4.54% | 4.59% | 4.82% | 3.65% |
| 1.18 | 1.10 | 1.22 | 1.21 | 1.12 | 1.09 | 1.06 | 1.05 | 0.99 | 1.05 |
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