Trading Pit

Exec Development

Startup Game

The Startup Game provides a fun and interactive way for students to learn about the process of forming a company, focusing on valuation, determining appropriate employee mix, and questions about retention of equity. Students receive a role before class starts, with supporting information based on the type of role.


Wharton’s International Exposure Management and Valuation (IEMAV) simulation puts students in the role of an international Chief Financial Officer and presents them with multiple scenarios, each highlighting a different source of cash flow currency risk. For each scenario, the student (or group of students) receives background information about a company and the specific risks faced.


The Long Horizon Return Simulator (“Horizon”) allows students to simulate long-horizon returns based on historical monthly return distributions for various asset classes. The goal of Horizon is to help students address investment portfolio decisions relating to shortfall risk and asset allocation across asset classes.


Faculty Author: Robert Stambaugh

Students can test an investment strategy over prior time periods by using historical data.

Backtester Welcome Screen

Backtesting is the process of testing an investment strategy over prior time periods by using historical data. The Backtester application is a simple backtester developed to reinforce academic investment concepts without the complexities and the costs of a commercial backtesting product.

Backtester has two major functions:

  • Setting up and running a backtest and
  • Analyzing the results of a test.

Students create an investment strategy by using Backtester’s wizard interface. The wizard guides students through the process of defining a backtest’s attributes that will be saved and executed at the user’s convenience. Once the test has been run and results have been generated, the students can use various analytical tools to review their outcomes.

Backtester Wizard When students log into Backtester, they can either choose to view the results of a previously run test or they can create a new test. Clicking the add button initiates a wizard interface that will guide students through the process of defining test parameters.

  • Creating a Backtest:

    Students can control various aspects of their backtest depending on their goals and the class assignment. These variables include the name of the test, start and end dates, number of securities per portfolio, type of portfolio weighting, and re-sort frequency.

  • Screening Criteria:

    By default, all available securities will be considered for inclusion in the backtest unless the student narrows the list by adding one or more screening criteria. Backtester screens act as filters for the security list and are based on metrics such as market cap, book to market ratio, price to earnings ratio, lag returns, and price.

  • Partitions:
    Students may optionally create distinct portfolios by dividing securities into partitions based on the value of one or two metrics. By default, Backtester creates a single portfolio according to a student’s choices in the first two steps of the wizard.
  • Review and Save:
    The final screen of the wizard allows students to review the selected parameters of their backtest and either return to make changes or finish and save changes. Once a test has been saved, it is ready to be run against the historical financial data stored in the application.
  • Backtester contains four portfolio analysis screens that help students decipher the results of a test: summary, values and returns over time, rate of return over time, and security count over time.

    Backtester Analysis


    The summary screen recaps the test’s parameters and displays performance information about the specific portfolios generated by the test. It also includes several useful tools:

    • Performance grid tab: uses color to display the overall returns of each portfolio relative to other portfolios in the test.
    • Sort breakpoints tab: this table displays the actual metric values used to create the boundaries of each portfolio. These values change over the life of the test.
    • Correlations tab: renders a correlation matrix that measures the portfolios’ movements in relation to one another.
    • Export results button: generates an Excel spreadsheet of detailed monthly returns and portfolio values that can be used for further analysis.
    • Export securities button: generates an Excel spreadsheet that shows the individual securities held in each portfolio for each month of the test.
    • Optimize button: links to a webpage that formats the Backtest results for use with Professor Stambaugh’s Portfolio optimization utility.

    Values and Returns over Time

    This graph shows monthly values and returns for each portfolio over the life of the test.

    Backtester Graph