Friday, November 9, 2007

Week 10 - You Dare Question My Salted Meat?

You ask good questions, grasshopper, let me see if I can explain.

First, all of the financials (Sharpe, beta, and alpha) are based on pure points. They do NOT take into account the statistics that the original (and still sexy) Box uses, they only look at week to week output of points regardless of the team they are playing. So if DAL scores a rolling average of 25 points per game (NE is somewhere around a ridiculous 39 points per game on the season), and last week they scored 25 points, they would show a lower volatility, especially if they did that consistently. If DAL (beta of 1.39) plays NYG (beta of 1.12), the beta module will pick the team with lower volatility (basically, whichever team is closest to 1.0), which in this case is the NYG.

Sharpe and alpha are different ways to measure essentially the same thing: how good is the team relative to their volatility/risk? Despite NYG having a slightly better volatility, DAL has been PAYING OUT HUGE on it's moderately higher risk. DAL has an alpha of 8.78 to NYG 2.85, and DAL has a Sharpe of 0.99 to NYG 0.53. That makes sense when you think about it - despite NYG playing more consistently, they have played more consistently at a lower level than DAL. One week, DAL may score 50 points, and the next 20, but they are still outputting higher scores than NYG.

Now, what I may do to make the modules run a little more evenly is to find out which teams consistently cover rather than just score. I tried this earlier this week, and it got sticky. It may be worth a revisit. The financials right now are great ways to modify your thinking, ESPECIALLY on moneyline bets, since it's gives you a benchmark against which you can measure the schizophrenic teams. This chart may better illustrate that, noting that interesting schizo teams include ATL (beta rank 8th, Sharpe and alpha rank 30th), DEN (beta rank 5th, Sharpe and alpha rank 29th and 28th), and KC (beta rank 7th, Sharpe and alpha rank 28th and 29th). Basically it's showing you that a.) these teams perform consistently week to week, and b.) they perform consistently BAD week to week.

Sharpe Alpha Beta
Team Rank Rank Rank
ARI 18 24 6
ATL 30 30 8
BAL 26 27 20
BUF 27 26 14
CAR 24 25 3
CHI 23 23 13
CIN 9 7 19
CLE 4 3 31
DAL 2 2 10
DEN 29 28 5
DET 7 8 18
GB 8 9 25
HOU 11 6 26
IND 3 5 23
JAC 19 20 16
KC 28 29 7
MIA 15 11 32
MIN 14 18 15
NE 1 1 2
NO 12 14 9
NYG 6 10 11
NYJ 25 16 30
OAK 20 22 22
PHI 17 17 29
PIT 5 4 21
SD 10 15 12
SEA 13 13 24
SF 31 31 4
STL 32 32 27
TB 22 19 17
TEN 16 12 28
WAS 21 21 1

What I've done with these rankings is AVERAGE the scores in with the original Box (they are making sweet love). It's a weighted average, so the original Box is weighted 2/3, the financials are 1/3 (historically it seems to pick up a few games, but I have to finish the back test). This explains why the pick is still NYG, because they are actually statistically better and lower volatility, versus a high risk/high return play of DAL which is weighted less. What the averaging has accomplished is switched the following picks from the original Box:

STL +11.5 switched to NO -11.5
ATL +4 switched to CAR -4

Both of these games were on the cusp statistically, but the weighting pushed them over the edge.

Are you humbled by my intellect? I thought so. (For all this boasting, I figure I should lose 100% of my bets this week - karma's a hideous bitch goddess).

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