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 |
| 8.68% |
| 537.84 |
| 14.59% |
| 0.65 |
| 0.17 |
| -52.56% |
| 1.62 |
| 0.96 |
| -0.59 |
| 1.34 |
| 0.98 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 11.31% | 7.89% | 8.70% | 9.81% | 8.85% | 9.17% | 10.25% | 10.50% | 10.43% | 9.24% |
| 985.59 | 442.27 | 539.33 | 702.14 | 559.78 | 604.97 | 776.57 | 822.31 | 808.53 | 614.59 |
| 20.28% | 18.16% | 19.47% | 18.65% | 17.56% | 17.17% | 16.89% | 16.99% | 16.50% | 17.62% |
| 0.63 | 0.51 | 0.53 | 0.60 | 0.57 | 0.60 | 0.66 | 0.68 | 0.69 | 0.59 |
| 0.21 | 0.14 | 0.17 | 0.17 | 0.19 | 0.19 | 0.21 | 0.21 | 0.23 | 0.22 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.71 | 1.53 | 1.56 | 1.64 | 1.57 | 1.60 | 1.67 | 1.69 | 1.72 | 1.57 |
| 1.04 | 0.77 | 0.80 | 0.93 | 0.88 | 0.93 | 1.07 | 1.06 | 1.09 | 0.94 |
| 0.18 | -0.40 | -0.30 | -0.12 | -0.24 | -0.19 | -0.07 | -0.19 | -0.12 | 0.01 |
| 4.98 | 4.84 | 6.65 | 4.31 | 2.98 | 2.48 | 1.89 | 2.65 | 1.84 | 2.33 |
| 1.30 | 1.18 | 1.02 | 1.08 | 1.05 | 1.24 | 1.16 | 1.13 | 1.17 | 1.18 |
| -0.09 | -0.08 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 | -0.07 |
| 4.34% | 1.19% | 1.48% | 2.55% | 1.85% | 2.23% | 3.24% | 3.53% | 3.57% | 2.39% |
| 1.12 | 1.07 | 1.17 | 1.14 | 1.09 | 1.06 | 1.06 | 1.05 | 1.02 | 1.06 |