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 |
| 7.78% |
| 376.67 |
| 14.68% |
| 0.59 |
| 0.15 |
| -52.56% |
| 1.56 |
| 0.86 |
| -0.59 |
| 1.38 |
| 0.95 |
| -0.06 |
| 0.00% |
| 1.00 |
| Q1 | Q2 | Q3 | Q4 | Q5 | Q6 | Q7 | Q8 | Q9 | Q10 |
| 10.42% | 7.01% | 7.91% | 8.84% | 7.86% | 8.61% | 9.37% | 9.68% | 9.67% | 8.34% |
| 688.40 | 310.57 | 388.34 | 483.74 | 383.81 | 459.22 | 546.82 | 585.43 | 584.80 | 430.89 |
| 20.68% | 18.35% | 19.72% | 18.96% | 17.75% | 17.43% | 17.08% | 17.05% | 16.61% | 17.81% |
| 0.58 | 0.46 | 0.49 | 0.54 | 0.52 | 0.56 | 0.61 | 0.63 | 0.64 | 0.54 |
| 0.20 | 0.13 | 0.16 | 0.16 | 0.17 | 0.18 | 0.19 | 0.19 | 0.21 | 0.20 |
| -52.63% | -54.55% | -50.75% | -56.48% | -45.99% | -48.74% | -48.81% | -50.34% | -45.17% | -42.02% |
| 1.65 | 1.48 | 1.52 | 1.57 | 1.51 | 1.56 | 1.61 | 1.64 | 1.66 | 1.52 |
| 0.95 | 0.69 | 0.73 | 0.84 | 0.79 | 0.87 | 0.98 | 0.98 | 1.01 | 0.85 |
| 0.21 | -0.39 | -0.29 | -0.10 | -0.22 | -0.17 | -0.04 | -0.19 | -0.11 | 0.04 |
| 4.87 | 4.93 | 6.72 | 4.28 | 3.05 | 2.47 | 1.94 | 2.80 | 1.92 | 2.38 |
| 1.28 | 1.13 | 1.01 | 1.05 | 1.02 | 1.24 | 1.20 | 1.12 | 1.13 | 1.15 |
| -0.09 | -0.08 | -0.09 | -0.08 | -0.08 | -0.07 | -0.07 | -0.07 | -0.07 | -0.08 |
| 4.74% | 1.53% | 2.04% | 2.92% | 2.13% | 2.88% | 3.61% | 3.97% | 4.07% | 2.79% |
| 1.14 | 1.08 | 1.17 | 1.14 | 1.09 | 1.07 | 1.06 | 1.05 | 1.02 | 1.06 |