With World Cup fever in full swing, there is hardly a street you can walk down without hearing people feverishly debating about who is going to be the winner. The loudest of these conversations can usually be heard in the bookies where punters have been laying down millions of pounds worth of bets over the last two weeks. For most people, betting on the world cup is simply a matter of national pride, with punters keen to back their home nation.
For others however, betting on the world cup is a more serious endeavour! These punters are keenly analysing form and wading through statistics and variables in an effort to try and determine who will take home the coveted prize, and be named champions of the world for the next four years. Among these, investment banks have now thrown their hat into the ring and have started using complicated forecasting models to try and predict the world cup.
UBS Picked Germany, Oops!
Analysts at UBS recently released their predictions for the 2018 world cup, based on the results of their modelling. Interestingly, the model forecast Germany as having the highest chance of winning the tournament with Brazil, Spain and England given the second, third and fourth highest chance respectively. Given that Germany were unceremoniously sent home from the competition after losing in the opening stages, it seems the modelling might be a little off.
Interestingly, the model gave Panama, Egypt, Tunisia, Costa Rica and Saudi Arabia the lowest chances of winning. So, seeing as the German side they picked for glory actually lost, maybe the winning team is among these teams tipped to lose, wouldn’t that be interesting?
News that England were given the fourth highest chance of winning the competition will come as welcome news to the nation’s fans who are once again gripped with excitement after their team made it through to the quarter finals of the competition, after beating Columbia on penalties in a match which saw the nation holding its breath with suspense.
What Did UBS Have To Say?
Commenting on the English side, Mark Haefele, Chief Investment Officer at UBS said “England has a balanced team, an attribute that complements teamwork and can transform a successful team into a future champion”. However, it is worth noting that the model only ascribed England an 8.5% chance of winning, so probably best to wait until after they face off with Sweden before getting too excited. The model gave England a 66.2% chance of making the quarter finals but only a 31.4% chance of making it to the semis, so let’s see if the numbers stack up or if England can break the model and go all the way.
How Was The Model Created?
Commenting on how the model was created, the bank explained that “to account for the many different roads to the final, we conduct what statisticians call a ‘Monte Carlo’ simulation. What might sound fancy to some readers is in practice quite simple: instead of mapping out all the different constellations, we draw a large number of random variables and use these to bring in a random component to our calculations and to simulate the championship.
A better team is still more likely to win than its lower ranked opponent, but this is sport, and upsets do happen. After we’ve repeated this again and again, we end up with the results of 10,000 virtual tournaments. We then simply count how many times each team won, made it to the semis, or was already eliminated in the group stage”.
The projections made by the model were largely in line with those made by the major bookies who all favoured Germany, Brazil and Spain as their top teams. However, with Germany out it would seem that “all bets are off” and its “all to play for”.