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 |
| 7.15% |
| 231.03 |
| 14.11% |
| 0.56 |
| 0.14 |
| -52.56% |
| 1.55 |
| 0.81 |
| -0.73 |
| 2.13 |
| 0.96 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 10.36% | 7.11% | 7.41% | 7.84% | 7.20% | 9.13% | 9.84% | 9.43% | 9.64% | 8.88% |
| 451.95 | 228.92 | 245.44 | 270.27 | 233.86 | 354.47 | 409.02 | 377.04 | 392.67 | 336.65 |
| 20.34% | 18.32% | 19.92% | 19.41% | 17.80% | 17.42% | 16.81% | 16.86% | 15.89% | 17.51% |
| 0.59 | 0.47 | 0.46 | 0.49 | 0.48 | 0.59 | 0.64 | 0.62 | 0.66 | 0.57 |
| 0.20 | 0.13 | 0.15 | 0.14 | 0.16 | 0.19 | 0.20 | 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% |
| 1.68 | 1.50 | 1.51 | 1.52 | 1.48 | 1.62 | 1.67 | 1.66 | 1.72 | 1.58 |
| 0.93 | 0.69 | 0.68 | 0.74 | 0.72 | 0.91 | 1.03 | 0.96 | 1.04 | 0.91 |
| 0.01 | -0.46 | -0.34 | -0.13 | -0.27 | -0.20 | -0.05 | -0.20 | -0.10 | 0.06 |
| 5.77 | 6.09 | 7.81 | 4.63 | 3.76 | 3.12 | 2.74 | 3.78 | 2.92 | 3.38 |
| 1.19 | 1.08 | 0.97 | 1.03 | 0.99 | 1.20 | 1.15 | 1.04 | 1.09 | 1.11 |
| -0.09 | -0.08 | -0.09 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 4.88% | 1.93% | 1.82% | 2.19% | 1.80% | 3.67% | 4.39% | 4.11% | 4.52% | 3.72% |
| 1.18 | 1.11 | 1.23 | 1.21 | 1.13 | 1.10 | 1.07 | 1.06 | 1.00 | 1.06 |
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