Track performance against the S&P 500
By the end of this lesson you can
- Read the performance chart correctly
- Calculate excess return and drawdown
- Avoid misleading comparisons
The chart
The paper portfolio chart plots your total value each day next to SPY scaled to the same starting cash. Both use the same daily adjusted closes, so the gap between the lines is your excess return.
More than one number
Look at total return, excess return versus SPY, and maximum drawdown. A portfolio that beat SPY by 1% while falling twice as far in the worst week took much more risk for a small difference.
Misleading comparisons to avoid
Comparing different date ranges, ignoring dividends on one side, or measuring only your best holding. VEXA’s comparison avoids these, but your own reasoning should too.
Try it in VEXA
Real data, so the numbers will differ from the lesson’s examples.
Key terms
- Maximum drawdown
- The largest peak-to-trough fall over a period.
- Risk-adjusted return
- Return considered relative to the risk taken to earn it.
Paper Challenge task
Note your total return, excess return versus SPY and maximum drawdown so far.
Simulated trading with virtual money on real end-of-day prices. Nothing is bought or sold for real, and results in a game do not predict real-world results.
Knowledge check · 3 questions
Try it
Record total return, excess return and max drawdown in your journal.
Key takeaways
- Compare like with like: same dates, same method.
- Excess return is the gap to the benchmark.
- Always look at drawdown alongside return.