Global financial majors get busy with football predictions

Global financial majors get busy with football predictions

Global financial majors get busy with football predictionsGoldman Sachs picks Brazil as favourite while Germany is top contender for UBS; France, Brazil and Spain are ‘safe havens’ for Nomura

The FIFA World Cup 2018 kick-off is just hours away and the predictions arena is hotting up further.

Latest to join the bandwagon is global financial major Goldman Sachs who, on most days of the year analyses financial markets and macroeconomic models, but has now used the data and tools at its disposal to predict the winner for this year.

According to Goldman Sachs, Brazil is expected to win a record sixth World Cup football title defeating Germany in the final and while France has a higher probability than Germany of winning the title, it’s bad luck in terms of the draw will make it clash with Brazil in the semi-finals and so it won’t make it to the final.

In a 49-page detailed report, the leading global investment banking firm has used data analytics and artificial intelligence to analyse team level trends and individual player characteristics to create models and simulations before making its predictions.

“The core of the publication is the forecasting model… After hours of number crunching, 200,000 probability trees, and 1 million simulations, some of the results are strikingly intuitive,” stated the report that was released on Monday.

“England meets Germany in the quarters, where Germany wins; and Germany meets Brazil in the final, and Brazil prevails. While Germany is more likely to get to the final, France has a marginally higher overall chance of winning the tournament, and along with Brazil, Germany, and France, Portugal squeaks into the semis, ahead of Argentina,” it added.

Goldman Sachs is not the only prominent financial investment firm that is interested in football predictions. Last month, UBS presented its own set of analysis and predictions when it said that Germany is the top contender for lifting the trophy, though Brazil and Spain also has a good chance of winning.

“According to our simulations, Germany, Brazil, and Spain have the highest likelihood to win the tournament… but watch England, France, Belgium, and Argentina for surprises,” said the UBS report.

“Host nation Russia will start in the Cup’s weakest group and is expected to progress to the round of 16, where it is likely to lose against Spain or Portugal,” it added.

Meanwhile, Goldman Sachs predicts that Spain and Argentina are expected to underperform, losing to France and Portugal in the quarter finals, respectively. Interestingly, just like stock picks Japanese major Nomura has categorised its top picks for the global sporting event in three categories. So, while France, Brazil and Spain are ‘safe havens’, Poland, Uruguay and Denmark are the ‘low beta’ ones. Peru and Senegal have been classified as ‘high beta’ teams.

According to Nomura, the safe havens have the greatest chance of winning while the low beta ones have the greatest potential to become the ‘dark horse’ in the tournament. The high betas have only a limited chance of getting through the group stage but Nomura does not rule out a surprise to the upside. The predictions may well be for football and not for the financial markets but come with their usual share of hedging.

“It is difficult to assess how much faith one should have in these predictions,” says the Goldman Sachs report.

“… the forecasts remain highly uncertain, even with the fanciest statistical techniques, simply because football is quite an unpredictable game. This is, of course, precisely why the World Cup will be so exciting to watch,” it adds.

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