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 |
| 9.40% |
| 677.45 |
| 14.50% |
| 0.69 |
| 0.18 |
| -52.56% |
| 1.68 |
| 1.04 |
| -0.61 |
| 1.39 |
| 0.99 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.30% | 7.83% | 9.26% | 9.44% | 9.16% | 9.62% | 10.50% | 10.70% | 10.94% | 9.37% |
| 1053.30 | 458.81 | 655.66 | 684.52 | 639.18 | 714.56 | 877.95 | 918.42 | 971.07 | 672.70 |
| 20.05% | 17.98% | 19.32% | 18.50% | 17.42% | 17.06% | 16.76% | 16.80% | 16.34% | 17.44% |
| 0.64 | 0.51 | 0.56 | 0.58 | 0.59 | 0.63 | 0.68 | 0.69 | 0.72 | 0.60 |
| 0.21 | 0.14 | 0.18 | 0.17 | 0.20 | 0.20 | 0.22 | 0.21 | 0.24 | 0.22 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.72 | 1.53 | 1.60 | 1.62 | 1.60 | 1.63 | 1.69 | 1.71 | 1.76 | 1.59 |
| 1.04 | 0.77 | 0.85 | 0.90 | 0.92 | 0.97 | 1.10 | 1.09 | 1.14 | 0.96 |
| 0.19 | -0.40 | -0.32 | -0.11 | -0.24 | -0.20 | -0.07 | -0.20 | -0.14 | 0.01 |
| 5.14 | 4.95 | 6.71 | 4.37 | 3.03 | 2.50 | 1.93 | 2.76 | 1.91 | 2.42 |
| 1.33 | 1.20 | 1.03 | 1.07 | 1.05 | 1.23 | 1.15 | 1.13 | 1.17 | 1.17 |
| -0.08 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 3.57% | 0.39% | 1.15% | 1.45% | 1.37% | 1.87% | 2.73% | 2.99% | 3.31% | 1.78% |
| 1.11 | 1.06 | 1.16 | 1.12 | 1.08 | 1.06 | 1.05 | 1.04 | 1.02 | 1.05 |