What Would Wall Street Do: Down Dog, Down

Matt MoscardiAnalyst INovember 19, 2007

IconSo, much like the state of the stock market, the historical trends are being bucked week in and week out this season.

Typically, underdogs are much safer bets. This year, favorites are just mauling the dogs. The big spreads, with the exception of NE (a bet against NE is like lighting your money on fire), went down for the most part—WAS, KC, MIA, and NYJ all played up to parity levels, winning or pushing with spreads greater than 9.

The small spreads and wildcard games are ALL going in favorite favor—JAC, TB, HOU, MIN, NYG, STL, and SEA. Incidentally, the beta and alpha for most of these teams are in the bottom half, and those that are in the top half (STL and HOU, for instance) are there because they play consistently POORLY, not well.

So here are the Box's results:

Results for Week 11
Spread: NO +1 (-110) v. HOU - $10.70 wins $0.00
Spread: CAR +9.5 (-110) v. GB - $9.10 wins $0.00
Spread: OAK +5 (-105) v. MIN - $8.80 wins $0.00
Spread: WAS +10.5 (-110) v. DAL - $5.67 wins $10.82
Spread: MIA +10 (-110) v. PHI - $5.03 wins $5.03
Parlay: PIT (-450) v. NYJ, DAL (-550) v. WAS, GB (-450) v. CAR, CIN (-165) v. ARI, CLE (-145) v. BAL - $5.56 wins $0.00
Bet Totals: $44.86
Potential Winnings: $57.60
Payouts: $15.85
Actual Profit: -$29.01
%s: Week 11-64.67%
Pick: WAS Opp: DAL
Pick: 13.75 Diff: 2.50
Opp: 16.25 Adv: WAS
Pick: NO Opp: HOU
Pick: 20.75 Diff: -14.75
Opp: 6 Adv: HOU
Pick: MIA Opp: PHI
Pick: 19 Diff:0.00
Opp: 19 Adv: MIA
Pick: OAK Opp: MIN
Pick: 11 Diff:3.25
Opp: 14.25 Adv: OAK
Pick: CAR Opp: GB
Pick: 18 Diff:-7.50
Opp: 10.5 Adv: GB

WAS, MIA, and OAK all agree with the Box's original picks. The games that don't agree, GB and HOU, both disagree in large ways. In the NO game, one which we discussed at length this week, the statistics favor NO by a slight margin, predicting a NO win by under 1.5. On a statistical level, NO is the better bet. However, HOU has a HUGE advantage in financial scores—almost entirely due to its beta (volatility).

If I dig deeper, I find that NO's points per game (PPG) average has steady increased from a consistent average of 12 ppg, spiking with an upward trend starting in week 7 and a new average of 22 ppg. NO's opponents during this period: ATL, SF, JAC, STL. Three out of the four games are the weakest teams in the NFL, while JAC is a wildcard team with terrible volatility.

On HOU side of the ball, they have played almost every game at the same level, scoring an average ppg of roughly 22 from virtually week 1 forward. And HOU is doing so in a very competitive AFC South, playing IND, TEN, and JAC. It would seem to me that HOU's advantage is not an aberration, and may actually indicate that a HOU bet is the safer bet. But let's look at GB v. CAR.

GB by the financials is a heavy favorite, and rightly so. They have been pretty dominant in the NFC this year, able to score against almost every opponent they've played. According to the rankings, CAR offers ever so slightly more bang for the buck in their Alpha score, but GB is still utterly dominant. The biggest difference between GB v. CAR and NO v. HOU is the spread. NO v. HOU is basically a pick 'em, and therefore the financials are far more useful than the statistics. There is no metric I have yet found that supports GB giving 9.5 to CAR—by any measure, that spread seems to be overblown.

I think the conclusion I can draw is that small spreads favor financial rankings, where large spreads favor statistical rankings. I may try to back test and implement a new module for this week (despite the short week) that calculates win ratios for small margin games if I use just financial scores. If I can improve my win rate by 2-4% by doing so, my overall win rate will eclipse the long sought after 60%.

Because of the short week, I'll be posting heavily tomorrow and Wed, so keep an eye out.  I hate losing, so I'm shooting high this week.