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 |
| 8.95% |
| 388.45 |
| 14.17% |
| 0.68 |
| 0.17 |
| -52.56% |
| 1.69 |
| 1.01 |
| -0.68 |
| 2.04 |
| 1.00 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 12.57% | 8.36% | 9.53% | 9.91% | 9.12% | 10.79% | 11.56% | 11.69% | 11.51% | 10.51% |
| 793.79 | 341.95 | 439.06 | 474.58 | 402.46 | 565.95 | 656.78 | 672.64 | 649.81 | 535.69 |
| 20.80% | 18.13% | 19.75% | 19.28% | 17.62% | 17.26% | 16.65% | 16.74% | 15.81% | 17.38% |
| 0.68 | 0.54 | 0.56 | 0.59 | 0.59 | 0.68 | 0.74 | 0.75 | 0.77 | 0.66 |
| 0.24 | 0.15 | 0.19 | 0.18 | 0.20 | 0.22 | 0.24 | 0.23 | 0.25 | 0.25 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.82 | 1.59 | 1.64 | 1.65 | 1.61 | 1.74 | 1.81 | 1.83 | 1.88 | 1.70 |
| 1.12 | 0.81 | 0.85 | 0.91 | 0.90 | 1.07 | 1.21 | 1.19 | 1.25 | 1.07 |
| 0.20 | -0.44 | -0.34 | -0.12 | -0.28 | -0.21 | -0.06 | -0.23 | -0.10 | 0.04 |
| 5.41 | 6.03 | 7.65 | 4.53 | 3.73 | 3.08 | 2.71 | 3.67 | 2.86 | 3.25 |
| 1.29 | 1.12 | 1.04 | 1.21 | 1.05 | 1.25 | 1.30 | 1.10 | 1.19 | 1.17 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.06 | -0.07 |
| 5.25% | 1.56% | 2.05% | 2.36% | 2.00% | 3.63% | 4.45% | 4.63% | 4.79% | 3.69% |
| 1.18 | 1.09 | 1.22 | 1.21 | 1.11 | 1.09 | 1.06 | 1.05 | 0.99 | 1.05 |
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